Tag Archives: housing market

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.


Housing Market Bringing Back High-End Financing Quicker Than Expected

When the housing meltdown hit everyone back in 2008, the majority of lenders basically ceased originating jumbo loans for high-cost areas.

In 2013, with rates at decade lows, an increasing number of banks and lenders are returning to the jumbo loan market since demand for housing has jumped in the past 9-to-12 months.

Most lenders look back one year ago and see a huge difference in availability of programs. The market just continues to improve and it is warm welcome to all in the real estate industry. In many neighborhoods, those vacant lots within developed communities now have construction in the works.

While the products have increased for consumers, there are still real obstacles that must be overcome prior to being able to qualify for these loans.

If you are doing a refinance, expect to have at least 20% in equity and you’ll need 20% for a down payment as well. There is not much flexibility in this qualification unless you find something from a niche portfolio lender.

Borrowers will also need to show prove they are able to make the monthly payments of that these loans require. So, you should expect to:

  • Have official records of your income and assets dating back several years.
  • Have a credit score with a minimum of 720 (some lenders will require 740)
  • Demonstrate that their monthly mortgage payments will be less than 36% to 38% of their gross income.
  • Show that all your monthly payments, which encompasses credit cards, car loans, will not be more than 41% of your gross monthly income.
  • Show you have 10% of the amount you are borrowing in savings or brokerage accounts that can be used to make your mortgage payments in case you become unemployed.

If borrowers are able to demonstrate that there is an opportunity to secure some of the best jumbo loan rates we’ve witnessed in in the past few years.