B-I-G mortgages
High-end home buyers are being motivated by low interest rates to up their mortgages at rates seen during the housing boom. On loans bigger than $417,000, the average rate on a 30-year mortgage is 5.15%. Two years ago, this same mortgage would have had a 6.41% rate. If the math is done-this means payment on a $600,000 home loan is about $480 less than the same loan in 2009. This is an annual savings of $5,800!
Termed as ‘Jumbo Loans,’ these high end mortgage rates are competing with conforming loans backed by Fannie Mae, Freddie Mac, and other federal agencies. In a direct comparison, the difference in the jumbo loan and conforming loans is a mere .43%-the narrowest spread since 2007. Borrowing bigger amounts is becoming more and more doable opening opportunities for buyers who may have previously not been able to reach so high.
Buyers have already reacted. Jumbo loans comprise of one in every six new mortgages so far in the first quarter of 2011. While we are not advocating buyers purchase above their means, the availability of these kinds of loans will help in the real estate recovery for the higher end properties by providing opportunities for those who do qualify for the mortgages. In October of this year, the federal government will increase the jumbo loans to prices as high as $729,750 (varying by location). The Bozeman location has described jumbo loans as anything above $430,000.
The nuts and bolts needed for the jumbo loans are a down payment of 20-30%, thorough documentation of income, assets, net worth, and two years of tax returns, recent brokerage and bank statements, and high credit scores. As in all prime property, actions must be made promptly because the market is never stagnant.
If you are thinking about acting on this opportunity, contact me! I would love to work with you to find the home of your dreams and assist in locating a lender that can advise you soundly.Information taken from: http://online.wsj.com/article/SB10001424052702304223804576446042270052566.html?mod=WSJ_RealEstate_sections_SecondHomes
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