Just Approved: Paying principle and interest instead of interest only

Loan officer: Bob Gerson, California Bank & Trust.

Refinance -Cash Out to Pay off 2 loans

Property type: Single-family home in Oakland.

Appraised Value: $2.1 million.

Loan Amount $1.24 million.

Loan-to-value ratio: 59%.

Loan: Portfolio 10 /1 yr. Cmt Index cash-out refinance.

Rate: 3% with no points.

Backstory: 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 all time lows, due to the COVID-19 pandemic back in April, 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 self-employed decided only to have his wife on the new loan since her W-2 Income was excellent and able to afford the new loan with our bank. Being self-employed requires many more documents due to the COVID crisis; profit and loss, invoices, business bank statements that all need to 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 had found out that the Husband decided to take a forbearance on an Small Business Administration loan that was tied to his business, this loan was tied to the title of their property as well.

This challenge was a three-prong issue. First, the wife was also going to be responsible to include the SBA loan payments, as well as the combined loan to value on the SBA loan. Fortunately, with three consecutives on time 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 as well ,to ensure that these...