Because additional funds from investment firms are persisting in growing the jumbo mortgage market, mortgage loan originators are in a better position to increase their loan volume.
Lenders have increased the amount of fixed rate mortgage due to the higher demand from the secondary market. The risk to lenders is decreasing when mortgage-backed securities are bought by investors. From a report by Kroll Bond Ratings, US$ 6bn has been bought by Redwood Trust dating back to 2010.
The mortgage companies who are utilizing Redwood Trusts mortgages the most are Cole Taylor, Everbank, First Republic, Prime Lending, Shore Financial, and WJ Bradley. As expected, the high-cost areas in the country which include Boston, New York, Los Angeles, San Diego and San Francisco had the most jumbo loan activity.
Additional lenders are coming into the field as well like Stonegate Mortgage which claims it has funded US$ 115M for buying jumbo mortgages. Other companies like PennyMac and Impac Mortgage have been consistent in the jumbo market have had funding in the 2013 year too.
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.
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.