Look In More Places For Jumbo Loans
It is not uncommon to find many lenders providing jumbo mortgages to their clients
, however the conditions for approval are a lot tougher than people can ever remember.
Jumbo mortgages are defined as mortgages that are larger than a conforming loan. In other words, they are greater than the conforming loan limit, the maximum loan amount that government agencies Fannie Mae and Freddie Mac will purchase.
The tricky area is the maximum allowable loan limit is different according to your location. The majority of housing markets have the standard maximum of $417,000, and all loans which are above that amount fit into the jumbo loan category. In the high-cost housing areas, like Los Angeles, any home loan greater than $729,750 is a jumbo. So, you can get a conforming loan rate in Los Angeles for what is a jumbo loan in most other cities.
During the housing boom times which went from 2003 until the summer of 2007, mortgage lenders had relaxed their guidelines for jumbo loans simply to attract business. Once the sub-prime crisis hit, credit became tight and trickled down to other segments of the mortgage industry from Option ARMs, ALT-A to prime borrowers, everyone began defaulting since equity appreciation was not on the rise anymore.
Lenders had to adjust and tighten their guidelines and as a result every loan is scrutinized more closely with stricter requirements, and especially so for the self-employed. Stated income loans are all but gone with many lenders unless you have 35% to 50% down or equtiy in your property and that is only with a slight few lenders.
To be eligble for a jumbo loan in the current market, you should anticipate:
- To have a down payment minimum of 20 percent to buy (or have a minimum of 20 percent equity in order to refinance; some niche lenders still offer 10% down for purchase).
- To fully document your income.
- Your proposed housing payment must be under 38 percent of your gross salary.
Applicants who fall under these rules will discover that today's interest rates are some of the best ever offered. It is still in your best interest to compare rates and fees for a jumbo loan as these loans are not available everywhere.
In addition, borrowers should have credit scores 720 or above or debt to income ratios at 38 and below. No exception nowdays as there is too much risk or lenders. Some good news just came in which is home sales rose 10% in the month of October 2009. New likes this means loans are being done and consumers are taking advantage of it so maybe it is a sign that lenders will eventually loosen up the standards ever so slightly.
by: Ray Heinson
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