Refinance closes out loans and reduces principle payments

Loan officer:

Bob Gerson, California Bank & Trust. Cash out to pay off

Refinance:

two loans.

Property type:

Singlefamily home in Oakland.

Appraised value:

lion.

Loan amount: Loantovalue ratio: Loan:

$1.24 million.

59%. Portfolio 10/1 CMTIndex cashout refinance. 3% with no points.

My clients had a first and second loan that they were paying their current lender at interest only for the past four years. With fixed and ARM rates at alltime lows due to the COVID19 pandemic, rates have drastically gone down to where it makes sense now to pay off those interest only loans in order to reduce their principle mortgage payments.

The husband who was selfemployed decided to only have his wife on the new loan since her W2 Income was excellent and able to afford the new loan with our bank.

Being selfemployed requires many more documents due to the COVID crisis — profit and loss, invoices, business bank statements that all need to be updated monthly. So to make this as simple as possible, we just had his wife on their loan.

All was going smoothly until our bank found out that the husband decided to take a forbearance on a small business administration loan that was tied to his business. This

Rate: Backstory:

$2.1 milloan was tied to the title of their property as well.

This challenge was a threeprong issue. First, the wife was also going to be responsible for the SBA loan payments, as well as the combined loan to value on the SBA loan.

Fortunately, with three consecutive ontime payments on the SBA loan, as well as having plenty of equity in their property with the wife’s steady employment income, we were able to close their new loan.

The third issue was that the SBA lender required financials from the husband to ensure that these payments were going to be approved, as well as keeping the SBA loan subordinated as a second lien on the title report.

Lesson learned: What may seem simple can turn out to be difficult.