Jumbo and Super Jumbo Lending up to $2,500,000
With mortgage rates at multi-year highs, and no end in site for mortgage rate hikes in 2019, it is safe to say that home affordability is getting tougher in Denver, especially for the first-time home buyer. With regards to luxury properties however, interest rates do not have a direct correlation to this type of financing, as it is classified as NON (QM) Qualified Mortgage, and not purchased, guaranteed, or securitized by Fannie Mae or Freddie Mac. The volatility is not daily, and jumbo pricing changes ever so slightly.
A reason for this, is that the portfolio lender is holding the mortgage, and not having to package, and sell it off to the secondary market. If they wanted to charge 1% (not likely) they could, it is their money.
Set to Increase in 2019, the loan amount limits for conforming loans will be $484,350. That means any loan amount higher then this amount is considered a JUMBO LOAN. Usually serviced from the lender using one of their portfolio programs, this is a loan that is usually a flagship product, so they come in with very good pricing.
But how does this help me?
Good question. If you are finding yourself attracted to a bigger home and price in Colorado, and are not comfortable with the hefty down payment, Jumbo Loans are available up to 95% of the purchase price with a high enough credit score. Loan options available for all kinds of jumbo loans up to $2,500,000 are as follows from a basic selection of the following.
- 30 year fix --which will carry a higher rate and highest payment
- 5/1, 7/1, and 10/1 ARM - carries a lower rate fixed for 5, 7, or 10 years.
- Interest Only Feature - Will usually be interest only tied to a 30 year fix - lowest
- 40 year fix - Yes, this does exist
Jumbo Loan Case Scenario
John and Julie find a home for $1,000,000 they want to purchase in the LoHi neighborhood of Denver. They want to put as little as they can down and are only comfortable putting 10% down. They speak to a local Colorado mortgage broker, and are given a quote on a 30 year fix of 5.75% Interest Only.
- Purchase Price - $1,000,000
- 10% down - $100,000
- Financing 90% LTV at $900,000
- 4.75% 30 year fix payment - $4,694.83
FEATURES and BENEFITS of a JUMBO LOAN
Besides being able to finance a majority of the purchase price, the jumbo loan has other features which should help more buyers get qualified for their next luxury home purchase. They are as follows.
Flexibility in getting your Income Cleared - . If you are self employed and have been turned down from the bank, please do not get discouraged. Seek out a local Denver Mortgage Broker and get better loan options. They are out there. We can qualify you based on your business bank statements, a P&L letter, etc. We don't put heavy weight on your tax returns if you cannot show enough income that way. Again, there is always a better way.
Financing up to 95% LTV with no Mortgage Insurance - That means no bothersome payment paid every month which is basically throwing your money away.
Debt To Income Ratios up to 50% -- Yes, 50%. If you are speaking with a Colorado Mortgage Broker and he is saying 43% is their max, I am here to tell you there is a better way. Keep researching your options. Non QM Lenders mostly ALL go up to 50% DTI, or Debt to Income Ratio, which will qualify more home buyers. This is their niche.
Non-Occupying Co-Borrowers - Yes, if you cannot qualify on your own, you can have a non-occupying co-borrower on the loan to help you qualify. Mom, Dad, etc, can go on the loan with you, and not have to live there.
Do your research. There are many staffed ghost writers out there writing babble about higher interest rates, larger down payments, stiffer requirements, etc, and have no idea about lending, as they are just paid to write content. If you are interested in what you qualify for, or have any questions regarding jumbo loan financing, seek out your local Colorado Mortgage Broker as you shop around... You might be surprised what you will find as the better alternative.
Please understand these companies and lenders are people just like you. They want your business, and are not tied to the QM Standards, which can be extremely rigid. We have seen approvals with limited reserves, lower credit scores, etc. If the loan makes sense, we can usually get it underwritten. Do your research!