Just Approved: Delayed financing challenges overcome

Mortgage broker: Liz Bayer, ProMortgage.

Property type: Single-family home in Mill Valley.

Appraised value: $4.075 million.

Loan amount: $1.77 million.

Loan type: Jumbo, 30-year fixed.

Note rate: 6%.

APR: 6.131%.

Backstory: I was referred to a couple two years ago by their financial planner, who wanted me to get them pre-approved to buy their first home.

While they had strong income, it was going to be tight to qualify them for their targeted price point. This was because the parents who were gifting $350,000 toward the transaction did not want to sign the gift letter, as they were worried about the tax consequences. As a result, they decided to setup a promissory note instead of the gift.

This kicked my clients out of qualifying, because we had to add the payments for this loan to their overall debt. After I explained this to my clients, they disappeared, so I assumed that they had moved on to another lender.

However, in March of this year, they approached me advising that they bought their home paying all cash by taking out a large loan from various trust accounts in addition to cobbling together funds of their own, and now wanted to obtain a mortgage shortly after they closed on their new home.

This transaction is referred to as “delayed financing,” which is a cash out refinance on a recent purchase. The benefit of delayed financing is that there is no mandatory waiting period to obtain a cash out refinance when a purchase was made within the past six months.

Where we ran into hurdles when my clients re-approached me was that they had advised there was only one loan...