By Jason Sasena, Manager Mortgage Loan Sales, Kinecta Federal Credit Union
Getting a Jumbo Loan in Today’s Market
There’s been quite a bit of publicity over the last few years about the difficulties of obtaining a jumbo home loan. And while there’s no question that lenders now require more documentation than in decades past, there’s actually never been a better time to consider acquiring or refinancing a jumbo loan on your primary residence or vacation home.
Why should you take another look at a jumbo loan that might work for you? First, the historic lows we’re seeing in interest rates extend to jumbo loans as well. And while many lenders stopped offering high-dollar loans in 2007, they’re now beginning to come back.. At Kinecta we’ve been offering interest rates at less than 4 percent, loan programs with as little as 10 percent down, and loans up to $4 million – terms that would have been unheard of 10 years ago.
What is a Jumbo Loan?
A jumbo loan is a home loan that exceeds the “conforming limit,” or the maximum amount that Fannie Mae and Freddie Mac will buy. Jumbo loans are typically any amount borrowed above $625,500; loans that are significantly higher (usually between $2 million and $4 million) are called Super Jumbos. There are multiple jumbo loan programs available today. They range from traditional fixed rate to adjustable rate mortgages that offer fixed introductory terms of 3, 5. 7 and 10 years, which provide the option of a lower payment at the beginning of the loan.
Your Most Important Decision: Finding the Right Lender
The most critical factor in getting a jumbo loan is choosing a lender who not only has significant experience in high dollar loans in the Southern California market but is also willing to take the time to understand your unique financial circumstances. Jumbo loan borrowers often have complex financial situations that don’t fit into rigid underwriting systems, and require non-traditional thinking and specific expertise to get to the finish line. Look for a lender who takes a personalized approach in evaluating the specifics of your finances, such as self-employed income and liquid assets.
This can often mean forgoing the “big banks” that may not be able to provide the flexibility offered by credit unions or community banks. For example, Kinecta’s Mortgage Loan Consultants have the freedom to take a common sense approach instead of being confined by a pre-determined formula. We’re also able to lower our credit score requirement to 700 (vs. 720 or higher) and typically require one property appraisal instead of two.
Tips for a Hassle-Free Jumbo Loan Process
- Document your income and liquid assets. Most jumbo loan lenders require two years of individual and/or business tax returns, two consecutive pay stubs and two months of bank statements. But don’t forget that your liquid assets can make a difference, as well. Borrowers may be able to use a portion of their liquid assets (such as checking/savings accounts, stocks, mutual funds, CDs and IRAs) as income for qualifying purposes.
- Find a lender who takes a full-service concierge approach. Working with a lender who understands the constraints of a busy schedule and makes the process easy can save you hundreds of hours and headaches in getting your loan completed. Automated underwriting systems can streamline the origination process and reduce documentation. If your loan involves overseas individuals or assets, it’s also important to work with someone who knows how to navigate those waters.
- Do your homework and talk with your lender about what program might be right for you. There are many jumbo programs available, so it’s important to find the one that meets your short- and long-term financial goals. We often suggest checking with your financial advisor to ensure you are making the loan decision that works best for your total financial picture.
- Secure financing before you start shopping. As with conventional financing, having your financing in place before home shopping maximizes your purchase power to leverage purchase negotiations.
Jason Sasena can be reached at 949.253.5331 or visit www.kinecta.org/oc or Kinecta’s Mortgage Center in Newport Beach at 4041 MacArthur Blvd., Suite 100.