OldDog
Posts:24
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| 08/28/2008 6:11 PM |
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After watching the market for some time, we have decided to prepare to buy some property (whether or not this is a wise decision is a topic for another post). We plan on getting a 30-year-fixed mortgage, which we understand is available up to $697,500 in San Diego County.
( http://activerain.com/blogsview/409281/GOOD-NEWS-FHA-Releases )
To our astonishment, while several lenders we spoke with confirm that the maximum amount that can be borrowed at a 30-year-fixed is $697,500, other lenders have told us that the maximum amount is $417,000 (which appears to be the norm outside of California) regardless of whether or not we are in San Diego County. Can anyone explain how this works? It seems like lenders are ignoring the Economic Stimulus Act that permits the increase. And on a more selfish note, how have people successfully addressed this situation to get loans on these favorable terms? We have great credit, but don't want to deal with ARMs or the increased interest rates associated with jumbo loans. |
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mvpeezy
Posts:48
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| 08/28/2008 6:22 PM |
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| The 417 is conforming, the 687,500 is conforming jumbo. The rates aren't the same it is a bit more for the jumbo, and the guidelines are tougher. Allowable debt ratio's and such. How much is the purchase price of the property you are looking at and how much are you putting down? Also, the max debt ratio I have seen getting approved on the conforming jumbo is like high 40's...they are full doc only also. |
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OldDog
Posts:24
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| 08/28/2008 6:38 PM |
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| We would be looking to buy a place for around $1.2M, and expect to put about 30% down. Ideally, we would like to borrow up the full $697,500 and get a second mortgage to cover the difference. Because we expect to have less-than-ideal terms on the second mortgage, the terms on the first mortgage become much more critical. |
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mvpeezy
Posts:48
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| 08/28/2008 6:55 PM |
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Well you definitely should be able to do it...and I would look at what it would look like to do everything on one loan. What rate were you figuring on getting on the first? My thinking would be that the second could be ugly so that the slight difference you would pay in rate on the first from getting a conforming jumbo to just a jumbo loan to 70% might work out better than trying to break it up in two loans.
I do loans here in SD I don't know if this is frowned upon here or ok...but if it is OK than I would be more than happy to price up some options for you to see what works best, but definitely would need to talk to you about the your whole picture.
Again, if this is not allowed here the mods can delete my email if not email me at mvpalmer at gmail dot com. I am not trying to break any rules here just trying to help. |
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OldDog
Posts:24
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| 08/28/2008 7:26 PM |
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Thanks mvpeezy. I appreciate your offer, but I've already spoken with a mortgage broker. I don't want to step on anyone’s toes, but I was just checking with the lenders to "spot check" the numbers I got from my broker when I discovered the issue that I described above. I was troubled by the responses that I got from different lenders, and their ignorance (or disregard) of what I thought was the maximum allowable loan at a non-jumbo rate. After reading your reply, I realize that perhaps my comment regarding ignorance should have been directed at myself, as I was under the assumption that the jumbo rate didn't start until borrowing above $697,500.
See, I've already learned something. |
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mvpeezy
Posts:48
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| 08/28/2008 7:56 PM |
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Ahhh I see...well I will say this, I have been in the business a long time and I never fault a borrower for not knowing everything about mortgages. In fact I have never worked with anyone who does either. There is so much to know that you have to know that you have to learn every day, and then when market changes like the current one happen, or as guidelines change like they have been the last 2 years...you have to re learn all the new stuff and throw the old stuff out. It is really impossible for someone who does not work in it every day to have a solid grasp of how it works. Most everyone I speak to THINK they do, but they don't. Like I said it is like going to school every day, and the curriculum changes at a moments notice!
Anyway, I respect you honoring your relationship with your current broker! That is great, but if you have any questions further feel free to ask. Good luck! |
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sleepybear
Posts:116
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| 08/28/2008 7:58 PM |
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| You wrote, ". . .the Economic Stimulus Act that permits the increase." I don't think it requires a lender to participate in loans with the higher limit. Shop around. |
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sleepybear
Posts:116
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| 08/28/2008 8:30 PM |
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| addendun: I think the new, higher limit refers only to what is regarded as conforming (i.e., eligible for purchase by FNM). It used to be that "jumbo" meant "larger than conforming" but perhaps the lending community is making a distinction between two levels of what will now be conforming loans. |
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mvpeezy
Posts:48
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| 08/28/2008 8:46 PM |
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Here you go guys...you can read up on them. I have not heard yet whether they are going to continue past 2008 when they are scheduled to end. I would guess they might but who knows these days...
http://www.freddiemac.com/singlefamily/increased_limits.html |
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mvpeezy
Posts:48
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| 08/28/2008 8:52 PM |
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Posted By sleepybear on 08/28/2008 8:30 PM
addendun: I think the new, higher limit refers only to what is regarded as conforming (i.e., eligible for purchase by FNM). It used to be that "jumbo" meant "larger than conforming" but perhaps the lending community is making a distinction between two levels of what will now be conforming loans.
Just to clarify, standard conforming is not conforming jumbo which is the product we are discussing here. It is a different product with different guidelines and rates. It is the first time fannie or freddie have purchased loans of that size. They are much tougher to get through, specifically because of debt ratio. Standard conforming loans we can still get through with debt ratio's up to roughly 64%, but these conforming jumbo's are much tighter I have not seen anything over high 40's get approved. |
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Caligirl43
Posts:137
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| 08/29/2008 8:47 AM |
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| I wrote down your email address MVPeezy (in case they do delete it). My mortgage limit is a fraction of Old Dog's though. I hear and have read that real estate agents and mortgage brokers don't like to waste much time on us po' folks - not enough money in it for them - but I'm still hoping to find someone good. |
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OldDog
Posts:24
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| 08/29/2008 9:10 AM |
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| Thank you mvpeezy and to everyone else who has responded for all of your help and the useful information. One other question, is there any place in particular that I can go to follow the news and get updates as to whether the jumbo conforming loans may be extended past 2008? |
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sleepybear
Posts:116
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| 08/29/2008 9:20 AM |
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This link will take you to fairly "old" but very informative info about the new loan limits:
http://www.bankrate.com/brm/news/mortgages/place11.asp
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OldDog
Posts:24
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| 08/29/2008 9:27 AM |
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| Thanks sleepybear. Yikes! Those last couple of lines in that webpage are a real eye-opener, showing rates that are over a full point above the 30-year conforming rates. I may have to rethink this whole jumbo conforming thing (like mvpeezy suggested). Dang, but I like the thought of a loan with fixed payments and no balloon. |
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Eugene
Posts:268
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| 08/29/2008 9:27 AM |
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Standard conforming loans we can still get through with debt ratio's up to roughly 64%,
No.
Debt ratios on conforming loans are capped at 28%. |
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mvpeezy
Posts:48
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| 08/29/2008 10:43 AM |
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Posted By Eugene on 08/29/2008 9:27 AM
[i]Standard conforming loans we can still get through with debt ratio's up to roughly 64%, [/i]
No.
Debt ratios on conforming loans are capped at 28%.
Eugene, stick to what you know. This is the problem when people chat around the water cooler about stuff they don't know about.
I do it every day Eugene, for a living. You have NO idea what you are talking about.
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mvpeezy
Posts:48
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| 08/29/2008 11:01 AM |
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Posted By OldDog on 08/29/2008 9:27 AM
Thanks sleepybear. Yikes! Those last couple of lines in that webpage are a real eye-opener, showing rates that are over a full point above the 30-year conforming rates. I may have to rethink this whole jumbo conforming thing (like mvpeezy suggested). Dang, but I like the thought of a loan with fixed payments and no balloon.
Actually Old Dog, rates on the conforming jumbo's are the lowest I have seen since they came out right now. Literally I could get low 6's right now on the 30% down scenario. |
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BGinRB
Posts:71
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| 08/29/2008 11:14 AM |
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| And ad hominems boost your credibility tremendously. |
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Eugene
Posts:268
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| 08/29/2008 11:16 AM |
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Okay, I stand corrected.
As a guideline, the monthly housing expense-to-income ratio should not be greater than 25% to 28% of the Borrower's stable monthly income. The Borrower may exceed the monthly housing expense-to-income and monthly debt payment-to-income ratios only on an exception basis.
I suppose, if you document assets of 2x purchase price of the property, you COULD pull off 64% debt ratio .... |
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mvpeezy
Posts:48
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| 08/29/2008 11:28 AM |
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Posted By Eugene on 08/29/2008 11:16 AM Okay, I stand corrected. As a guideline, the monthly housing expense-to-income ratio should not be greater than 25% to 28% of the Borrower's stable monthly income. The Borrower may exceed the monthly housing expense-to-income and monthly debt payment-to-income ratios only on an exception basis.[/quote]
I suppose, if you document assets of 2x purchase price of the property, you COULD pull off 64% debt ratio .... Again, your guessing is not helping anyone. Why are you guessing and inserting it as fact? Stop. You do not need assets 2x purchase price of the property to qualify at technically a 63.99%. I am telling you facts, if you don't know otherwise why would you argue? Do you understand that with a 28% debt ratio, if you had only a $300 car payment as your ONLY debt outside of your mortgage, you would have to make $109,000 a year to qualify for a 375K purchase with 20% down. So, do you think the median income is $109,000 here in SD? What is the median home price right now? Would that work? No...it wouldn't. If it was, our median price would be 220K. Old Dog, a decent fact based mortgage website that isn't ad based or trying to get you to click something where your info will be sold is mortgagenewsdaily.com. |
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