Category Archive: Florida Jumbo Mortgage

Qualifying for a Jumbo Loan

More and more Florida mortgage lenders are now willing to offer jumbo loan mortgages to borrowers who are trying to finance larger homes. A jumbo mortgage is one that exceeds the “conforming loan limits” set by government-sponsored enterprises (GSEs) Fannie Mae and Freddie Mac. These limits represent the loans the GSEs are willing to purchase from approved mortgage sellers. In Brevard County, like most of the country, the conforming loan limit is $424,100 for a single-family home. The limit is higher in some more expensive counties, like Monroe County ($529,000) and Collier County ($450,800). A mortgage loan that exceeds those limits is called a jumbo loan.

After the 2008 financial crisis, many lenders reduced the amount of jumbo loan mortgages they would issue, but now that the market has improved, jumbos are also making a rebound. In the past, jumbo loans had much higher interest rates than conforming loans, but jumbo rates have been dropping down closer to, and sometimes lower than, conforming loan rates. Overall, jumbo loan mortgages are becoming easier to manage.

Making the Grade

While jumbo loan mortgages are increasing, the rules for qualifying for a jumbo loan are pretty basic. To qualify for a jumbo loan today, you will probably need:

  • A minimum 20 percent down payment, keep in mind some lenders allow as little as 10 percent down payment.
  • A credit score of 720 or higher, though some lenders allow scores as low as 620
  • Thoroughly documented income
  • Your new monthly mortgage debt and other monthly debts should not exceed 43% of your gross monthly income.

Shop around

Just because one lender turns you down, that doesn’t mean you can’t get a jumbo loan mortgage. Requirements and interest rates for these “portfolio loans” can vary between lenders, so it’s a good idea to check with more than one lender. If you’re planning to finance a larger home, Embrace Home Loans has extensive experience with jumbo lending. We can help you get the financing you need to make your dream home a reality. Call us at 407-733-6425.

Millennials, Mortgages, and Student Loans: Can You Buy a Home?

Many millennials are pointing to their student loan debt as a reason that they can’t buy a home. However, according to the 2016 National Association of Realtors® Home Buyer and Seller Generational Trends study, 35 percent of all recent buyers were millennials. So, how are these buyers reconciling student loan debt with mortgages?

One investment advisor, John Burkey of Burkey Capital, plans to launch a jumbo mortgage product that would allow borrowers to roll their student debt into a mortgage. However, the program would be for jumbo loan mortgages, which start at $417,000, and would initially only be available to borrowers with very strong credit, high incomes, and a high level of job security.

Other options

What can millennials who aren’t high earners do to qualify for a mortgage? It may be possible to alter your debt-to-income ratio (DTI) to make it more favorable. Your DTI is the total amount of debt you have compared to the amount of money you earn. Clearly, student loan debt can raise that percentage, but there may be ways you can nudge it back down:

  • You may be able to apply for a deferment, which can decrease or even stop your monthly payments for a set amount of time. If your student loan has been deferred for at least one year, it won’t be factored into your DTI if you are a Veteran and apply for a loan guaranteed by the Department of Veterans Affairs (VA). Conventional loans and Federal Housing Administration (FHA) loan will include student loan debt in the qualification process regardless of deferment.
    ● You may be able to apply for a graduated payment plan, which lowers your student loan payments for two years and then increases them every two years after that. If you’ve got a solid job and expect your income to increase, this could be a good option.
    ● You may be able to consolidate your loans, which might increase your payment term from 10 years (typical for student loans) to up to 30 years. However, remember that a consolidation loan may be issued by a private lender, which means you won’t be able to apply for a deferment.
    ● You may be able to get rid of other debt, like credit cards, to lower your DTI. And if your installment debt, such as a car loan, will be completely repaid within 10 months, some lenders may be willing to remove it from your DTI.

Don’t let student loans stop you

Student loans don’t have to be an obstacle to homeownership. Find out how much debt you need to reduce before you qualify for a mortgage, and get started. Set a budget that will help you reduce your debt and save for a down payment. If you need more information about mortgages and your student loan debt, contact Embrace Home Loans at 407-733-6425. We can work with you to help you figure out how you can qualify for an affordable mortgage.

Young Adults and Jumbo Loans

Even with the Federal Reserve’s December rate hike, interest rates are still historically low. Those low rates, coupled with looser credit qualifications, are helping millennials (people age 35 or younger) qualify for mortgages and even jumbo mortgages.

Jumbo loans, often called “nonconforming” loans, are any mortgage loan that is over the conforming limits set by the Office of the Federal Housing Enterprise Oversight (OFHEO). So they can’t be guaranteed or purchased by Fannie Mae or Freddie Mac. Those conforming limits are $417,000 in most of the country but go up to $625,500 in areas with the highest housing costs. In Florida, Collier and Monroe Counties have higher conforming loan limits ($448,500 and $529,000, respectively, in 2015).

Easing Loan Qualifications

Lenders are beginning to work with borrowers who may not fit into existing borrowing guidelines but are otherwise qualified. For example, jumbo loans are typically only extended to extremely creditworthy borrowers, and usually require higher down payments (generally 20 percent or more). Some lenders, however, may only be requiring down payments of 15 or even ten percent.

Typically, a lower down payment on a jumbo loan means the lender will require a borrower to have more cash reserves. Often, that’s at least six months of the borrower’s monthly housing expenses (principal, interest, taxes, and association fees). A lower down payment allows borrowers to keep more money in the bank to meet the reserve requirement. A ten or 15 percent down payment on a jumbo loan is still a lot of money, but some millennials are turning to their parents for help to make those lower down payments.

Lenders have begun approving jumbo loans for borrowers who may not meet the usual qualifications for income documentation or minimum credit scores but who can compensate in other ways. For example, lenders often require two years of tax returns to document the income of someone who is self-employed. However, some may approve a person who has been self-employed for less time, as long as he or she has a track record in that industry and has adequate funds on reserve.

Lenders have also been more willing to count capital gains from investments as income if borrowers can show a consistent record of cashing in those gains.

Shop Around

Different lenders have different standards for loan qualifications. If you’re looking for a jumbo mortgage in Florida, Embrace Home Loans can help you evaluate your options and find lenders that may be able to accept your individual circumstances. For more information, please browse our website, or call us at 407-733-6425.

Could a Smaller Jumbo Mortgage Be an Option?

With home prices on the rise and as the market recovers from the mortgage crisis of 2008, more people are looking for larger mortgage amounts. The Washington Post reports that 23.5 percent of mortgage loans in 2014 were jumbo loans, and jumbo mortgages were up 9.8 percent in the first quarter of 2015.

The answer for some people may be smaller jumbo loans. Smaller jumbo loans sound like an oxymoron, like “jumbo shrimp.” The term, however, applies to loans that fall between the normal conventional loan limit, $417,000, and the traditional starting point for jumbo loans, about $625,500. The reason these loans exist is that, in certain high-cost geographic areas, the normal conforming limit set by the FHA is increased. In Florida, the 2015 conforming loan limit for Collier County is $448,500, and for Monroe County, it’s $529,000. These loans may also be called “conforming jumbo” loans, “agency” loans, or “high balance” loans because they still conform to Fannie Mae and Freddie Mac guidelines for purchase.

Different Standards

Typically, non-conforming jumbo loans (those that exceed the conforming loan limits) require higher credit scores than conforming loans and a standard 20 percent down payment. That’s because the mortgage company must keep the loan on their own books rather than sell it to Freddie Mac or Fannie Mae.

Conforming jumbos, however, can still be backed by government agencies and borrowers typically pay lower interest rates, have lower down payment requirements and have lower qualification requirements (these requirements vary from lender to lender). So a first-time home buyer in Monroe County who can choose between a conforming and non-conforming loan for $529,000 might very may well choose a conforming loan backed by the FHA with a 3.5 percent down payment, rather than a 20 percent down payment. A veteran eligible for a VA loan might choose a conforming jumbo VA loan.

Know Your Options

The differences between conforming and nonconforming jumbo mortgage loans can be complex, so it’s a good idea to research your mortgage options. At Embrace Home Loans, we are experts in jumbo mortgages and can help you understand what financing may be available to you. Please browse our website for more information, or call 407-733-6425, and we’ll answer your questions about mortgages in the Sunshine State.

Get the Best Rates on Jumbo Loans with These Tips

Jumbo mortgages are any mortgage loan over the conforming loan limit set by the Federal Housing Finance Agency (FHFA). Currently, that limit is set at $417,000 in the contiguous United States. So, if you’re borrowing more than that to finance a house, you’re looking for a jumbo mortgage.

In a lot of Florida markets, $417,000 won’t get you very far. According to the Coldwell Banker Home Listing Report, the average home price in Palmetto Bay is $499,559, with Weston following at $462,636, Fort Lauderdale at $453,155, and Davie at $437,092.

Fortunately, jumbo mortgages are widely available, but they are generally more expensive than conforming loans. That’s because conforming loans are often backed by government agencies like Fannie Mae, Freddie Mac, the Office of Veteran’s Affairs (VA), or the Federal Housing Authority (FHA). Mortgage loans backed by the government are less risky, so lenders charge lower interest rates.

Tips to Reduce Your Rates

If you’re in the market for a jumbo loan, what can you do to make sure you get the best rates? Here are some ideas:

  • Make a Bigger Down Payment. The best way to lower the risk to your lender is to put as much cash down as you can. A 20 percent (or more) down payment can significantly lower your rates.
  • Submit a Squeaky-Clean Mortgage Application. Scrutinize your mortgage application carefully, and make sure it’s accurate. Get your credit report and check it carefully. The better your credit is, the better your interest rates will be.
  • Use a Licensed Mortgage Broker. A broker can help you find the best possible deals for your mortgage, and increase your options.
  • Shop Around. Jumbo mortgages are private-market lending, and every lender will have different terms and rates. With the help of your broker, compare as many loan options as you can.
  • Compare Closing Costs. Some lenders may offer lower rates but will try to make it up by charging higher closing costs and fees. Compare fees and costs just as carefully as you compare interest rates.

Get Our Perspective

At Embrace Home Loans, we can help you shop around for a jumbo mortgage that meets your needs while keeping your interest rate down. We’re experts in the Florida real estate market, and we’ll work with you to find the financing you need. Call us at 407-733-6425, or browse the rest of our website for more information.

Find the Jumbo Mortgage That’s Right For You

Jumbo mortgage loans are loans that are over the government-backed loan limit of $417,000 (up to $625,500 in some high-cost areas) set by Fannie Mae and Freddie Mac. Currently, jumbo loan interest rates are fairly low, so it may be a good time to lock in those rates. If you’re in the market for a jumbo loan, here are some tips to get the best deals.

  • Shop Around. Jumbo mortgage loans can’t be sold to Fannie Mae or Freddie Mac, so your lender will typically charge higher interest rates to compensate for that risk. Remember, though, you can shop around to different lenders and see which one can offer you the best rates. A mortgage broker can help you find all the best possible loan options, so you’ll get the best deal.
  • Apply Early and Carefully. Get ahead of the game by getting pre-qualified for your loan. Be careful when completing your loan application, and make sure your information is accurate and complete.
  • Put as Much Money Down as Possible. You’ll get better rates if you’re able to put down more than 20 percent of your home’s value as a down payment. A larger down payment reduces your lender’s risk, and lowers the interest rate you’ll need to pay.
  • Check Your Closing Costs. Some lenders may offer lower interest rates, but offset those low rates with higher closing costs and fees. When you’re researching your lenders and loans, make sure you compare closing costs just as carefully as you compare interest rates.

Find out more about jumbo loans

If you’re in the market for a larger home, remember that interest rates could go up in the future. You may want to act now to make sure you get the best deal. For help in researching your jumbo mortgage loan options, call Embrace Home Loans at 407-733-6425 or contact us online. We can work with you to find a jumbo mortgage that’s right for you.