Self-Employed Homeowner Gets Better Interest Rate by Waiting

Argo was introduced to his clients in the fall of 2012, and they came to him with a specific problem. Due to the changed income classification of the lead borrower at his closely held firm, he was getting declined for financing elsewhere.


Their actual income was clearly more than adequate. But due to changing the compensation plan earlier in the 2012 tax year, many lenders weren’t accepting it.

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After meeting with the borrowers and studying the situation, he understood their income and compensation and how to interpret that to a lender.


Their current rate was almost 6 percent, so their frustration with getting turned down in a 3 percent rate world was understandable.


Their credit scores were fine; the property value was not an issue and considering the increases in San Francisco property prices, this was becoming an ally that would only improve the likelihood for lower interest rates.


Essentially, to be effective and successful for them, he had to push their timing out to a window of perhaps some four or five months away from their initial 2012 consultation.


Argo counseled his clients to wait 3 1/2 months, allowing 2012 to come to an end so they could immediately file their taxes and show the final 2012 income to satisfy the “consistent and ongoing nature” of lending rules for income.


An additional time hurdle taken into account and awaiting them was the IRS’s typical annual slowness in processing Form 4506T.

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