Why Home Buyers Use Jumbo Loans In “Non-Jumbo” Situations
Buyers and Sellers Suddenly Can’t Meet On Price
Like M.C. Escher, you got to have perspective.
The National Association of REALTORS® published its most recent Pending Home Sales Index.
The report shows the number of U.S. homes under contract dropping 5 percent in January 2018 as compared to the month prior, falling to levels not seen in three-and-a-half years.
The data fell well short of expectations and caused a bit of consternation.
But, this is one of those times when you should look past the headline numbers, because when we look at January, there are a few big things that stick out.
- The number of homes for sale ranks as the lowest recorded for a January ever
- Mortgage rates made a sudden spike and climbed almost daily
- The weather was completely awful everywhere east of the Mississippi
Even still, the Pending Home Sales Index registered a 104.6.
Remember that a Pending Home Sales Index reading of 100 is equal to “how the real estate market performed” in 2001, the year the index was launched.
And 2001 was a very strong year for real estate.
We’re far above the benchmark for the index, so despite the January downturn, the real estate market remains strong and is expected to stay that way.
Today’s Mortgage Rates
Good news for home buyers. Mortgage rates aren’t suffering through a case of the Mondays.
Lower rates are helping today’s buyers who are out shopping for new homes.
So what mortgage rate can you expect from your lender today?
That’s going to depend on your your credit score, your loan size where you live, and what type of mortgage you choose to use.
Your choice in closing costs will matter, too.
Elect to pay discount points and you’ll get a lower rate. Take your lender’s zero-closing cost option and your rates will be slightly up.
Is it better to pay points to get that lower rate? That’s a choice you’ll have to make, and your lender can help you decide.
“Jumbo Loans” Is About The Worst Name Ever
Did you know that you don’t have to have a jumbo loan size to use a jumbo loan.
By definition, jumbo loans are loans that are too big to be backed by Fannie Mae or Freddie Mac, that exceed your local conforming mortgage loan limits.
But, much like Kleenex, Band-Aids, and Kitty Litter, the term “jumbo” has become generic.
“Jumbo” now describes a whole group of loans that once were known as portfolio loans, as in “these are loans were not doing through the government, they’re loans we’re keeping in our own portfolio.”
It’s important to buyers that portfolio loans aren’t done through the government because lenders freedom to make their own rules.
So they do.
- 100% loans for doctors that never require mortgage insurance
- Loans for buyers who are the first in a condo building
- Loans for cashing out a home after paying for it with cash
Regardless of size, these are each jumbo loans. It doesn’t matter if you borrow three million dollars or a hundred thousand — you can use a jumbo loan to get it done.
So, if you’ve got a large or small loan, or a slightly bizarre scenario, talk to a lender and see what you can get done.
Or, click to read up today’s most popular jumbo loans.
Get A Mortgage Pre-Approval Here