Loan program enables lower rate and no PMI home financing

Mortgage Advisor: John Holmgren

Property type: Single-family home in Oakland.

Purchase price: $675,000. Loan amount: $606,250

Loan type: 30-year fixed. Rate: 4.375 percent with no points and no PMI required. Backstory: John Holmgren’s clients had been renting in San Francisco for a number of years and wanted to own their own home. Not being able to find affordable housing in the city, they began looking in the East Bay, where they met their real estate agent, Susan Niami of Golden Gate Sotheby’s Realty.

The challenge was they were only able to put 10 percent down. This put them at a disadvantage against the all-cash buyers and those who could afford a higher down payment.

Additionally, their projected housing payment including mortgage, property tax, home insurance and mortgage insurance was going to be very large relative to their rent payments. This made their affordable price range lower than what was needed to acquire a home that met their needs.

Niami found a home that had just fallen out of contract. That property’s listing agent was very anxious to get the home back in escrow, so they were receptive to receiving an offer from her clients — despite the 10 percent down payment. The buyers were still reluctant to make an offer because the price still exceeded their affordability threshold.

Holmgren realized the property was located in a census tract that had been targeted by one of his lenders for reducedrate financing without mortgage insurance. These programs, known as Community Reinvestment Act programs, are offered by banks that must meet certain regulatory requirements to lend in all parts of the communities they serve.

This allowed Holmgren’s clients access to a rate that was half a percent below market. They were also not required to have the mortgage insurance that would normally have resulted from the 10 percent down payment.

These savings reduced the monthly payment to a level they could handle. They made the offer, which was accepted. The escrow closed in 30 days.

John Holmgren, Holmgren &

Associates, 510-339-2121, john@mortgageholmgren.com.