Imagine my surprise when an article in the Wall Street Journal featured:
- A client of our family's auto leasing company who was also...
- A client of my former mortgage company who was also...
- Complaining bitterly about lack of jumbo loans to refinance his house in ALAMO, CALIFORNIA (median home price, 1.3 million). Alamo is where my new office is located.
Yep, I actually know that guy. Do you see why this whole jumbo mess is on my mind? It hits pretty darn close to home.
It is also in the news for another reason: The jumbo market got a little bone thrown its way by President O. Part of the new stimulus bill increased limits for Fannie Mae and Freddie Mac loans in high cost areas like coastal California from $625,500 to $729,750.
Loans of $417,00 to $729,750 STILL have tougher guidelines and higher rates. But if you fall over into that place where your mortgage exceeds $729,750? You have just entered the mortgage"Twilight Zone".
There, 30 year financing is just a misty dream. Qualifying is more like the impossible dream. And the name of the game is CASH, as in how much can you put down?
Why should anyone be concerned about the frozen jumbo market? Isn't this guy some elitist snob who drives a BMW? Why does he need help?
It isn't about HIM needing help. Its about the economy needing help.
The truth is this:You don't know a guy who has a better chance of pumping money into our sick economy than this guy. This guy buys stuff. This guy pays big taxes. This guy hires people.
And that helps everyone.
- If he buys a $45,000 car he will pay $4162 in sales tax.
- When he buys the 1.2 million dollar house, he will pay $1,250 each month in property taxes.
- If he owns a business, he will hire people, and probably pay for their health care.
- And in spite of all of his write offs, AND his BMW, he will still pay plenty of income tax.
You may recall my story last summer about the top level executive who came to me, transferred from Missouri. He was okay with the fact he would need to live in a much smaller house, on a much smaller lot, for twice the price, just to move to California.
He had plenty of income to qualify, great credit, and a relocation package to die for. But he wasn't okay with the lousy financing in jumboland. He packed his bags after 3 months of frustration, and went back to Missouri, refusing to take the promotion and the transfer.
Too bad for California.
Now I know it is completely out of fashion to champion the cause of somebody who owns or wants to buy, a house worth a million bucks. President O never talks about this guy unless he is in the role of the villain or the elitist.
But if the point is to get money flowing? Maybe we should be stimulating from the top down instead of from the bottom up.
And we can start by making it a little easier to buy that million dollar house. Which in Alamo, California will make you the proud owner of a 2000 square foot stucco ranch house on a half acre lot.
How elite.
Written by Janet Guilbault, Mortgage Lending Specialist Based Out of the San Francisco Bay Area
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In northern Virginia we have similar property values--plenty of seven-figure properties, which are large but "normal" homes, not estates. In the north end of Arlington County (just across the river from DC), for example, about half our detached homes typically list below $1M and about half above. So our buyers need jumbo loans as well, and that part of the market is moving veeeeerrry slooooowly. Most of the contracts coming in are for the low-end properties, the $200-300K properties where first-time buyers and investors don't need to sell a house in order to buy one.
The usual trend still holds: A well-priced property in good condition moves relatively quickly. And buyers simply aren't interested in fixing things up, even cosmetic fixes. They want home that is updated already and that shows like a model.