Jumbo Loans Are Making a Come Back in 2017
As we enter the 10th year since the financial meltdown (and it has been 10 as of this August no matter what you have read because this is when Countrywide, WAMU, World Savings and others began to go down the tube and my head underwriter from our mortgage bank was on a house boat trip and unreachable…..long week that week) we are beginning to see expanded guidelines in the Jumbo loan space. While Fannie, Freddie and FHA and VA loan guidelines are straight forward and very black and white, Jumbo loans are more “Risk Based Priced” (more on that below).
Fannie and Freddie (read our US Government) are “the” established secondary market that will purchase all those “Conforming” type loans. Since Conforming loans make up the majority of the volume of all mortgage loans and there has been little secondary willing or able to take on jumbo loans, we have seen very little appetite in the jumbo area. With rates starting to inch up a little we are beginning to see some new outlier products come to market; bank statement loans, Doctor loans, less than 20% down on jumbos to name a few.
For the most qualified borrowers we are seeing Jumbo interest rates within 1/8 of conforming rates. This is actually amazing to see but keep in mind when you start to peel back the layers these rates are for the most well qualified, least risk borrowers. The rates can quickly move up based on the “Risk” of the underlying loan. Risks can include things like: lower down payments, lower credit scores, lower post-closing reserves, less time on a job, higher debt to income ratios, a 2nd done concurrently and many other factors. Think of it like this………..if it was your money would you rather lend to a person with a higher credit score or lower? A big down payment or a smaller? Without the fluid secondary market for Jumbo loans like we have with conforming loans (where all of those loans can be sold and passed on to Fannie and Freddie) there is a limited amount of money willing to fund Jumbo loans. And remember the Golden Rule of banking………..”those who have the gold make the rules”. So as rates rise and Wall Street develops a renewed appetite for these larger loans we will continue to see more Jumbo products come to market.
Blue Adobe Mortgage offers a range of Jumbo loan products for your potential buyer. We have some of the most aggressive rates out there if your buyer fits that profile and since many borrowers will be somewhere outside the lowest risk category we have those too.
- 10% down on Jumbo
- Delegated In-House underwriting
- Under 700 Credit score for Jumbo
- Same Local Appraisers for Jumbo loans
- Asset Depletion loans
- Non-Warrantable Condos
- Non-Occupant Co-Borrower
- HELOC 2nds to stretch buying power and stay out of MI
Happy House Hunting –