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Jumbo Rates Dip For Buyers

Some mixed housing signals as for the seventh straight week mortgage activity declined while interest rates were up and down, based on information from the Mortgage Bankers Association. MBAA statistics shows mortgage activity dropped 3.7 percent in the week ending Friday July 25th.

During that same week,  refinancing activity also fell by 4 percent.

For higher-end buyers in the jumbo loan category for loans above $417,500, there is some good news as rates dipped to  4.64 percent from 4.66 percent. the origination percentage dropped as well to 0.31 from .33.


Demand Brings In More Investors to Jumbo Market

With the housing market recovery underway due to pent up demand and low interest rates, the need for jumbo loans is increasing too. These type of mortgages are beginning to entice more investors as buyers understand they need a good-sized down payment and credit profile.

FDIC insured national and regional banks continue to originate these loans but on a portfolio basis. Lately, that aspect is turning around. Some facts that support that argument are the number of mortgage being securitized by investors has risen by 400-percent from one year ago from data supplied by Inside Mortgage Finance

Investors purchased approximately four billion dollars of jumbo loans and that figure is $3.5 billion greater than the total amount from the entire year of 2012.

Since the start of 2013,  Chase Mortgage and Everbank began issuing non-agency mortgage-backed securities. Their only other competition were two smaller rivals, Credit Suisse and Redwood Trust. Chase has surged from number four to the number two position for closing jumbo loans.

According to report from the National Association of RealtorsImage, homes sold between $750,000 and $1 million increased 41 percent in April from a year ago.  The demand will only grow in the jumbo market space as home prices move up in price and the economy improves Affluent homebuyers will have more choices for nice programs as well.

Jumbo loans this time around, unlike the housing boom years are being underwritten with scrutiny. There is no cutting corners for anyone applying for high-end financing. Borrowers can expect their mortgage originators to request full documentation o pass the stricter underwriting criteria.  Bank officials claim that these are loans are supported by verifying paperwork such as bank statements, source of down payments, so and borrowers typically have higher FICO scores so these are excellent loan products and an attractive investment for people seeking to obtain a higher yield.

Getting A Jumbo Loan With Less Than 20% Down

Can borrowers get a jumbo mortgage with less than 20% down?

It’s is possible but it is not typical to get a jumbo mortgage with less than a 20% down payment. There are a few lenders who will approve such as loan based on the condition  the borrower agrees to pay private mortgage insurance. he borrower’s credit score and the amount of their down payment will determine the cost along with other variables, and it may be as high as 1% of the loan amount annually.

Among the large banks which offer below 20-percent are Citi and the Bank of New York Mellon which provide as much as 100% financing to their account holders usually in their wealth management or private banking divisions. The terms ware different from one bank to the next but they frequently require two types of collateral. Normally, 60% to 80% of the loan will be secured to the property value while the remaining 20% to 40% can be pegged to an investment account they have with the bank. In this situation, the borrower can get around putting money down as a down payment.