Good morning all: I wanted to take a moment to talk about jumbo loans. My company, The Legacy Group, has several jumbo lenders we work with.

First, a bit of clarification. There are two types of jumbo loans. The first is called a conforming jumbo loan and in the tri-county area here (King, Snohomish, Pierce), the limit is $567,500 through the end of the year. Interest rates for a 30 year fixed conforming jumbo loan are running in the low 5's O.A.C. This is about .25% higher than a conforming loan (loan amount to $417,000). Down payments will either be 3.5% if you do an FHA loan or 10% if you do a conventional loan. Keep in mind that any down payment less than 20% will incur mortgage insurance.

The second type of loan is called a "super jumbo". This loan is for any loan amount above $567,500 for all practical purposes. Rates and terms on super jumbo loans are entirely different. There are fewer lenders in this niche and most will require at least 20% down. Some lenders will go up to $3 million on the loan amount although you should expect to have either significant equity or a large down payment if you need to borrow this much.

Recently I've been encouraged by the gradual easing of underwriting in the super jumbo market. For a while there, things were really tight. Now, I'm seeing lenders allowing more loans. Interest rates have also gotten attractive. I've even heard of 30 year fixed rates under 6%. Your best option is to do an ARM that is fixed for a certain period of time. Rates are quite a bit lower. For example, I have a client who is going to do a 7/1 ARM at 4.75%. Obviously, their payment will be quite a bit lower than if they chose a 30 year fixed rate.

So what can you expect to provide in order to do a "jumbo loan?" You will need to provide all the normal documentation including last 2 years W-2's or tax returns, asset statements showing you have reserves in most cases, last 2 paystubs, along with at least a 720 credit score for your best pricing. The portfolio lenders who usually do these loans will ask for alot. It's important that you work with a loan officer who understands this market. Feel free to contact me if I can be of further service. I'm located in Bellevue, WA. at the best-kept secret in the mortgage world! Have a great day!