Savvy broker helps buyer navigate the maze to homeownership
Loan officer: John Holmgren. Property: Single-family home in Oakland. Purchase price: $750,000. Amount borrowed: $600,000 first mortgage; $74,900 second mortgage. Loan terms: First mortgage 30-year fixed at 4.25 percent; second mortgage adjustable rate HELOC at 5.99 percent. Backstory: These home buyers had been working with a number of lenders for several months to obtain mortgage preapproval. One lender told them they qualified to buy a $900,000 home with 10 percent down. However, the lender told them there had been an error just as the buyers were getting an offer ready. They actually couldn’t borrow more than $636,000 and would have to put 20 percent down, something they were not in a position to do.
Their agent, Christopher Nava with Highland Partners Real Estate, referred them to John Holmgren to get to the bottom of what they were really able to borrow. Holmgren quickly realized where the problem was: The clients had recently relocated to the Bay Area from the East and in their prior jobs one of them had been paid on an hourly basis.
All of the lenders they approached wanted to average that buyer’s income based on the last two years of earnings. With compensation for people in that field so much higher in the Bay Area than in the buyer’s prior work location, calculating income in that way grossly undervalued his earnings and made it impossible to qualify for a moderately priced home in Oakland.
Holmgren was able to obtain data on compensation in the client’s previous work area vs. the Bay Area to convince the underwriter that his much higher current earnings were reasonable to use for qualification purposes. He was also able to use a concurrent second mortgage that followed the same underwriting criteria to enable the buyers to borrow more than $636,000 with less than 20 percent down without being required to have private mortgage insurance.
The home purchase closed a little ahead of schedule and the happy buyers realized their dream of Bay Area home ownership. John Holmgren, Holmgren &
Associates, (510) 381-1961, john@mortgageholmgren.com.