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The Resurgence of the Jumbo Mortgage Loan

The Resurgence of the Jumbo Mortgage Loan

Jumbo Mortgage LoanFor the past two years the overall state of the housing market has made steady improvements.  Month after month real estate agents have witnessed an increase in average home sales.  Homeowners have seen their property values return to their proper level.  With all of this good news there is one niche in real estate that has prospered more than others; the jumbo home niche.  For people looking to buy an affluent home in Florida here are some basic tips that will make the process smoother.

Up Front Money

For a conventional loan the lender will typically ask for a down payment in the range of 5 to 10 percent of the selling price.  While it is possible to find a lender that will allow only a 5% down payment for a jumbo mortgage it is more likely that the buyer will need at least 10% and in some cases 20%, based on their qualifications.

So, for an example purchase price of $500,000 this can mean that the buyer will need $100,000 for the 20% down payment or $50,000 on a 90% LTV (Loan To Value) Loan.

On the 90% LTV loan you will have a few options one being the Blended Jumbo loan. For example in this case we can do the first mortgage at a 80% LTV or $400K and a 2nd Mortgage Line Of Credit (LOC) for $50,000.  This way your overall interest rate will be lower and you will avoid having to pay Private Mortgage Insurance (PMI).

Surrounded by Similar Properties

One factor that an underwriter will pay close attention to is the home values surrounding the property.  If a person is looking at a home priced at $785,000 then the majority of the surrounding homes need to be valued at that level or hopefully higher.  The underwriter will investigate trends for the area as a whole to determine that home values have been on the rise in a steady and believable manner. There should not be a sudden jump in prices without a legitimate explanation.

Strong Credit Scores

While there are a few lenders that have offered jumbo mortgages to borrowers with 680 credit scores this is the exception rather than the rule.  The majority of lenders are going to require a middle credit score of 720 before considering a person for a jumbo mortgage.  The risk of a jumbo loan is obviously much larger than a conventional loanLenders have discovered that one of the main ways to minimize the chance of default is by only lending to borrowers with a strong track record of paying bills on time and managing their overall available credit.

Liquid Funds for Emergency

It was mentioned earlier that a person who wishes to buy a home with a jumbo mortgage will need significant cash for the down payment.  There is another requirement of jumbo mortgages related to available funds for the borrower.  In addition to having the liquid funds needed for the down payment the borrower will also need to have enough funds to cover at least 2 months’ worth of home payments, home insurance and property taxes.  In some cases the lender might require 3 to 6 months’ worth of funds.  This is known as cash reserves.

The money does not have to be sitting in a savings account somewhere.  It can be represented by stock investments, bonds, certificate of deposits or even a retirement account.  So long as the borrower can access the funds relatively easy then the money is considered liquid cash reserves.

The reasoning for this is quite simple. Based on recent history it is possible that some people may go through a temporary financial hardship.  By requiring the presence of cash reserves it adds a bit of security to the borrower by requiring them to have funds to make their house payment in the event of a financial misstep.

 

 

      

 

Questions, Comments or For more information you can email Christian Penner at TheMortgageTeam@ChristianPenner.com or visit us online at www.ChristianPenner.com or you can call us directly at: 561-316-6800

 

ChristianPenner.com
http://www.christianpenner.com/the-resurgence-of-the-jumbo-mortgage-loan/
The Resurgence of the Jumbo Mortgage Loan


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blackwhite#ChristianPenner, #MortgageBrokerWestPalmBeach talks about #RealEstateWestPalmBeach. He also serves other Local Areas and provides home #MortgageSolutionsforPalmBeachGardens, #Jupiter, #BocaRaton, #Wellington and #Tequesta. #ChristianPennerMortgageBrokerJupiter has the #lowestmortgagerates and the best #homemortgage programs like; #Jumboloans, #FHAHomeLoans, #VAHomeLoans, #ReverseMortgageHomeLoans, #FreddieMacHomeLoans, #FannieMaeHomeLoans and #HARPMortgageLoans. #ChristianPennerMortgageBrokerPalmBeachGardens has Served the area for over 15 years with his #HomeLoanLending Needs and Works with #FEMBIMortgageinJupiter. You Can Also Find Him On fb mortgageFacebook at: http://Facebook.com/YourMortgageBanker

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Christian Penner
South Flagler Drive, Suite 800, West Tower West Palm Beach, FL 33401
Phone: (561) 316-6800
 

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ChristianPenner.com
http://www.christianpenner.com/the-resurgence-of-the-jumbo-mortgage-loan/
The Resurgence of the Jumbo Mortgage Loan

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