Good morning all: I wanted to take a moment to talk about jumbo loans. My company, The Legacy Group, has several jumbo lenders we work with.
First, a bit of clarification. There are two types of jumbo loans. The first is called a conforming jumbo loan and in the tri-county area here (King, Snohomish, Pierce), the limit is $567,500 through the end of the year. Interest rates for a 30 year fixed conforming jumbo loan are running in the low 5's O.A.C. This is about .25% higher than a conforming loan (loan amount to $417,000). Down payments will either be 3.5% if you do an FHA loan or 10% if you do a conventional loan. Keep in mind that any down payment less than 20% will incur mortgage insurance.
The second type of loan is called a "super jumbo". This loan is for any loan amount above $567,500 for all practical purposes. Rates and terms on super jumbo loans are entirely different. There are fewer lenders in this niche and most will require at least 20% down. Some lenders will go up to $3 million on the loan amount although you should expect to have either significant equity or a large down payment if you need to borrow this much.
Recently I've been encouraged by the gradual easing of underwriting in the super jumbo market. For a while there, things were really tight. Now, I'm seeing lenders allowing more loans. Interest rates have also gotten attractive. I've even heard of 30 year fixed rates under 6%. Your best option is to do an ARM that is fixed for a certain period of time. Rates are quite a bit lower. For example, I have a client who is going to do a 7/1 ARM at 4.75%. Obviously, their payment will be quite a bit lower than if they chose a 30 year fixed rate.
So what can you expect to provide in order to do a "jumbo loan?" You will need to provide all the normal documentation including last 2 years W-2's or tax returns, asset statements showing you have reserves in most cases, last 2 paystubs, along with at least a 720 credit score for your best pricing. The portfolio lenders who usually do these loans will ask for alot. It's important that you work with a loan officer who understands this market. Feel free to contact me if I can be of further service. I'm located in Bellevue, WA. at the best-kept secret in the mortgage world! Have a great day!
Paul McFadden
Hi Paul,
Thank you for posting this great information. It is good to hear that rates are still low and that the credit markets are beginning to free up again, albeit you still need to be well qualified to obtain a loan.
Paul,
It's encouraging to see the the super jumbo mortgage is making a bit of a comeback and rates are inching lower. There is light at the end of the tunnel.
Hi Paul,
I don't get to many calls for Jumbo here in Tucson but when I do believe it or not I go though Washington Federal right in your neck of the woods. I am encouraged to know that some of the guides are losening up a little. I have a tricky one now that closes in December. Maybe it will be a little easier to get it through. Good news and post.
Michael: Good luck. I think WA. Fed. is a good outfit. Let me know if you need help at all with your loan. And thanks for commenting. I appreciate it!
Esko: I think you're right. It's taken a while and some of us have just had to hang on. I look for continued prosperity for those of us left. Take care.
Sharon: You're welcome! Thanks for commenting. I hope you're enjoying your Labor Day weekend!
Paul: Thanks for the great info and clarifying the difference between jumbo and super jumbo. Much appreciated.
Rene: You're welcome! I hope to see you again at Blossom if you can make it next week. Take care.