Advanced planning facilitates mixed-use property purchase

Mortgage broker:

Jim Valler, Holmgren and Associates/ Finance of America Mortgage.

Single-family residence in Berkeley.

$1.22 million. $822,375. 30-year fixed. 3.25% with no points.

My clients were renting an apartment in San Francisco and wanted to buy in Berkeley or Oakland where properties were more affordable, with quick access to Highway 80 and BART.

Their agent, Amanda Smith with Better Homes and Gardens Reliance Partners in Oakland, found a single-family mixed-use property that especially met their needs. The top floor had three bedrooms and

Property type:

Purchase price: Loan amount: Loan type: Rate: Backstory:

two bathrooms, as well as an especially large living room. The bottom floor was the same footprint as the top floor, but made the financing of the purchase more complicated because it was zoned as a legal separate unit to be used for business purposes.

The listing agent was concerned that financing would be problematic because of the mixed-use classification. Working with my appraisal department and underwriting scenarios desk, I determined that to satisfy Fannie Mae lending requirements for mixed-use properties, the property could represent one residential unit and had to be purchased as a primary residence. It also had to be located in a residential neighborhood and be typical for the area. Zoning requirements must also be met and represent legal use.

My appraisal department agreed that the property appeared to meet the property lending requirements. At the same time, the underwriting scenarios department confirmed that the transaction met Fannie Mae’s property use requirements because one of the buyers had a consulting business and was going to use the mixed-use space as an office, and not rent it to a third party.

When the offer was submitted, I called the listing agent to advise him that I had verified that property fit perfectly with Fannie Mae guidelines based on public records and past and future use. This conversation was instrumental in getting the offer accepted because it allayed the listing agent’s concerns that the financing could fall apart due to the unusual nature of the property.

This process illustrates the importance of thorough communication between real estate agent and lender to achieve a smooth close.