JUMBO LOANS - Reality Time

Sunday, May 02, 2010

Over the last six months, the Jumbo Loan market has taken a huge hit. Many of the market makers (those that make the loans) have either gone out of business or stopped making the loans altogether. However, the tide has tuned and lenders are back seeking these high quality loans for several reasons. First, these are generally high income high profile clients and soon to be customers. Approving them for a jumbo loan is the lenders way of trying to obtain the rest of the borrower’s banking business. Next, and just as important, with better underwriting and usually a little more down payment, these loans will perform better in a down market; not to mention the additional interest rates that jumbo loans carry.

No - Jumbo Loans have not gone away!
No - Jumbo Loans are not only available to the rich
No - Jumbo Loans are not only available to W-2 employees
No - You must put 50% or more down before you can obtain a Jumbo Loan
No - You will be charged rates in excess of 10%

These are just some of the myths going around today in the Jumbo Market. Each of these myths carries some kernel of truth.

Many lenders have stopped making jumbo loans, but others have re-entered the market to take their place.
Jumbo loans are available to those with both stable income streams and credit scores generally above 700.
Borrowers that can provide a history of filed tax returns for themselves and their business, in addition to a stable work history, can obtain a jumbo loan.
Depending upon the specific area of the country and what real estate pricing is undergoing (still a declining market, stable market or rising market) down-payments will be in the range of a minimum of 15%-20% up to 40% down.
Depending on the lender’s programs, variable or fixed rates and the term of the loan, rates are generally anywhere from 1/4% to 1% higher than comparable conventional mortgages.

Why contact a mortgage broker like Homestar Financial, LLC to help you find a jumbo loan?

The answer is simple - since many local banks do not do jumbo loans or they broker them out, you are limited to one type of jumbo loan from that bank. Homestar Financial has access to many jumbo lenders across the country that offer a range of products with varying interest rates to match. Next, we know how to package and present your loan to obtain an approval; not an approval subject to 10 different stipulations.

When requesting a jumbo loan, be prepared for stricter underwriting standards as well as numerous questions if your tax returns are complex or if there is anything unusual as far as your credit report, job history, income or your neighborhood. Lenders have learned their lessons and if they are going to make you a multi-million dollar home loan, they are going to make sure they do it by the book. Be prepared and your loan could be approved in as little as 10 working days; if not, expect a long drawn out battle.

Homestar Financial, LLC recently provided financing for a self employed borrower who purchased a multi-million dollar home in Cincinnati. From the day the borrower walked in to the date the loan closed was just 21days. Homestar Financial knows how to do it and complete the job in the least amount of time as possible.

(Michael Behrens has over 20 years of experience in the mortgage, real estate, and banking industry.