Tag Archives for " jumbo loan "

Some Lenders Just Don’t Get It

apathy


Jamie Dimon, CEO of JP Morgan, once wrote in a memo to shareholders that: “…mortgages are offered as a benefit to customers, not because it's a sound investment for the bank." In a recent article by CNBC, one-third of consumers surveyed complained about how their mortgage was handled by banks – and two-thirds of the complaints related to how banks handled all loans in general.

The excitement you experience during your first real estate purchase quickly dwindles when your bank demonstrates their apathy.

There are so many ways for banks to make the mortgage experience much less frustrating, yet “quality service” and “follow-up” tend to be forgotten. For example:

  • You were told that your loan application would be reviewed before the end of the week [But then you call your bank for an update and find out the underwriter in charge of approving your loan is out of the office]
  • You compile all back-up support to evidence your income and property insurance [But then you call your bank for an update and find out three of these items have been misplaced, and were never seen by the underwriter]
  • You go to the closing to sign documents and get the keys to your new property [But then you call your bank for an update and find out you need to wait three hours before they approve the documentation and authorize the loan disbursement]

The way some bankers handle mortgages for consumers is certainly not the way they would handle their own mortgage!

Here’s the Point: There are plenty of mortgage lenders who understand the importance of service – just make sure to pick the right one.

Jumbos Can Be A Beach

jumbo beach house

Your wife just fell in love with a beautiful house on Valentine’s Day.

“Honey I will love you forever!”

If your purchase requires a loan amount that exceeds the standard conforming loan limit ($484,350 per the Federal Housing Finance Agency), it will be considered a "jumbo loan", for which special rules may apply.

For example, if you prefer your down payment to be only 10%, your bank statements or retirement savings accounts may need to show additional liquidity in the amount of 12 months PITI (the projected monthly amount of your Principal, Interest, Taxes and Insurance).

And, you will need to address these questions:

  • Is the loan for your primary residence?
    [If not, there will be higher down payment, credit score, and reserve requirements for a second home or investment property]
  • Is your credit score at least 680?
    [If not, you may need to use a private lender, and your interest rate will be higher]
  • Do you have enough reserves?
    [If not, consider structuring a piggyback mortgage – that is, a conventional first mortgage up to the $484,350 maximum limit (so that the higher jumbo loan reserve requirements do not apply), and obtain a Home Equity Line of Credit for the balance]
  • Is your Debt-to-Income ratio below 43% (40% if a 1st Time Homebuyer)?
    [If not, you could increase your down payment (to lower your monthly PITI obligation), pay-off your car loan (to reduce your non-housing debt obligations), or negotiate an interest only structure (to eliminate your principal amortization)]


Here’s the Point: Jumbo loan rules can be discouraging, but there is usually a way to make it work.