Recently Closed - Delayed Financing in Rialto, CA
A few months back I received a call from a client that found me through ActiveRain, specifically looking for options to get a cash back mortgage on a recently acquired property. He had gone under contract to purchase a new home in Rialto, CA with a standard purchase mortgage through another lender (a big mistake, I'd add with very much bias!). A week before his settlement, that lender informed him they couldn't qualify him for a loan.
Unfortunately, this is an all too common occurence when lenders don't do their due diligence with a pre-approval, and only perform a prequalification and hope for the best. Problems come up late in the process, and the lender loses the deal after wasting resources, and the home buyer is left scrambling and stressed out.
The client's choice was either lose out on the home he really wanted, or come up with cash on short notice to purchase the home without a mortgage. Thankfully, he was able to borrow cash from a family member and close on his home, but the problem remained, where to get the cash to pay back the loan?
Delayed financing was the answer. We discussed the scenario, where the money for the cash purchase came from, and I explained the ins and outs of delayed financing and how it could help him recoup a substantial sum of money to not only pay back his loan, but to also put money back into the bank that he unexpectedly had to use when his prior mortgage application fell through with the other lender.
Thankfully, the story had a happy ending, we processed his application and got him the cash back he wanted. He had his cash back in the bank, his loan was repaid, and he had the new home that he wanted. A true win-win. Our client was great to work with and was ecstatic with the results. Here's what he had to say:
"John Meussner is a terrific Loan Officer. He guided me thru the loan process without any problems. Emails and phone calls are always quickly returned and he will treat you like his one and only client. He did a loan for me that had to go thru the "Delayed Financing Program", which not all loan officers know how to do. He got the loan file to a "CLEAR TO CLOSE" in 18 DAYS - which is amazing!!!! John knows is Fannie Mae/Freddie MAC guidelines and is more knowledgeable than the average loan officer. If you are looking for a Loan Officer to work with - I highly recommend John Meussner to everyone."
While we always appreciate the kind words of clients, it's important to note this client took the time to get educated on the program through a consultation with me, and worked to get us all of the required documentation ASAP. With that type of cooperation and teamwork, the loan process doesn't have to take any more than just a couple of weeks.
2 takeaways from this transaction that others can learn from:
1) Shopping for a random lender or the best rate, rather than an experienced and knowledgeable Loan Officer can be a costly mistake. Even though this client ended up in a good spot, he still paid 2 sets of closing costs for title work (the purchase then the refinance transaction) and ended up with a rate based on a cash out refinancing program rather than a purchase money rate, which would have been lower. This could have been avoided if we worked with him on his original preapproval.
2) This type of scenario shows the importance of mortgage planning VS working with a lender that just takes an application and sends it to underwriting. While the first loan application at the other lender ended up being a fiasco, we took the time to educate the borrower on the program, set expectations on what we needed from him and how the process worked, and once he was educated and knew what to expect, the process itself was easy.
While Delayed Financing is usually a product we use to help investors maintain liquidity, it is a great option for primary residence purchases too, in an instance like the one our client found himself in, or in a situation where a buyer needs to make a very quick close or wants the benefits a cash offer can present for a seller.
PS: A huge shoutout to Rosie Cazarez at Town Square Escrow in Rancho Cucamonga, CA. Rosie did a fantastic job and stood out as one of the better escrow officers I've worked with here in SoCal.
Questions about delayed financing, mortgage planning, or anything else from the mortgage world? Get a quick response by asking an expert here, or give us a call today.