More financial mortgage news… For the last few years, jumbo loans (loan amounts above $729,750) have carried extremely high interest rates, in the 8-9% range. With such a large mortgage amount, and a significantly higher interest rate for jumbo loans as compared to conforming lans, it has been very difficult for many home buyers to obtain a jumbo loan. These interest rates were higher for borrowing such a large amount because there were very few investors in the secondary market willing to take on the risk of buying these loans.
We are starting to see things change. Effective immediately, the pricing has significantly improved on jumbo loans for a mortgage amount up to $1,500,000. These are the changes, starting today:
The minimum credit score is 720, this used to be 740.
Minimum Down Payment: 20%
Maximum Loan Amount: $1,500,000
Reserves: There are post-closing liquidity requirements depending on LTV (Loan to Value) and loan amount. Now the requirement is for the buyer to have up to 20% in reserves
For instance, you can now get an interest rate of 5.65% (with 1 point, that is a fee of 1%of the loan amount) for a total mortgage loan up to $1.5 million. Just a few months ago, this loan interest rate would have been a few percentage points higher.
Used to be I told most people that the market was great for homes priced below $1million in our Arlington Virginia market (assuming it was a nice home) but really slow for homes priced above $1million. I may be changing my tune over the next few weeks.
This news is definitely a treat for home buyers who wish to purchase a more expensive home.
Beautiful Home in Waycroft Woodlawn neighborhood of North Arlington, VA