What you don't know about Jumbo Loans may kill you

If you are trying to sell a home that would require a jumbo mortgage you may be in for a shock. What most people don't know is that their is a big difference between conforming loans and jumbo loans when it comes to interest rates. Jumbo rates can be as much as 3% higher than conforming loan limits. Some Jumbo mortgage interest rates are 9% or more. This is bad news if you are marketing a luxury home. These higher rates makes the pool of buyers much smaller. The best bet obviously is if they can pay cash. If not, you may need to wait it out or be very patient when trying to find a buyer. It is just going to take longer to get these properties sold. I think most people don't realize how much jumbo mortgage rates have jumped. This is just the banks way of hedging their bets right now. Banks have more exposure when it comes to jumbo loan. With all of the turmoil due to the credit crunch, many lenders are just skid dish now.

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There are no Stated Income Jumbo Loans

I have had two calls this week from self employed people who want stated income jumbo loans. To set the record straight, there aren't any anymore. If you are self employed and want to buy a home, you will have to start reporting your income. I just spoke with a gentleman who needed a refi on a $600,000 mortgage. He had equity in the home for it was worth over $1,500,000. I got his tax returns and he is reporting just over $50,000 in come. This was a well to do individual who was belligerent in his assertion that he should have no problem in getting a loan. Well the truth is the banks don't care who you are anymore, they are going by the book these days. If you don't have documentable income, then no loan for you. Stated income loans help people skirt the issue of declaring income. I don't blame people for wanting to reduce their tax burden, but it is time to pay the piper now.

Raise the conforming loan limit to help out the Real Estate market

Ben Bernanke lowering the federal reserve rates every few weeks wont be enough to put life back into the real estate market. The problem as from what I can see it is that the conforming loan limits in most areas are to low for Fannie Mae and Freddie Mac. I live in Maricopa County where the conforming loan limit is $417,000. If you live in Scottsdale your home may sit for awhile on the market due to the fact that housing prices are much higher in these areas. The problem is that once you go over the $417,000 threshold you get into jumbo mortgage rates. Rates on Jumbo Loans can be 2% or more higher than for a comparable non conforming loan. This prices most people out of the market for higher priced homes, not to mention that you will need to bring in a heftier down payment to be able to qualify. We must get these limits down to get the mid level properties moving again.

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Ing Direct to the rescure on Jumbo Loans, the orange mortgage

When the subprime meltdown got going, Jumbo mortgage rates got hammered. Rates shot up from the high 6’s to the low 8’s. We can now do a stated income loan up to 1.5 million for the low 6’s again. I know that the high end market has been sitting a bit. Hopefully this will come as a shot in the arm to help stimulate the higher end of the real estate market.

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