According to an article at HartfordBusiness.com, jumbo mortgages are starting to make a comeback. This is good news for those of us who work in the luxury real estate market. Jumbo mortgages have been a real challenge lately. While things were definitely too loose on the lending side during the run-up to the real estate bust, the pendulum has swung too far the other way. Lately lenders seem to be searching for every reason they can to not loan money, especially on luxury homes.
David Adamo, CEO of the Stamford, CT based Luxury Mortgage Corp.“The jumbo mortgage market is at the beginning stages of a rebound. Jumbo mortgage rates are at historic lows and programs are becoming more readily available.” Adamo added, “The high-end housing market will most certainly get a boost from the increased availability of jumbo mortgage product.”
Jumbo mortgage rates have come down significantly. In 2009, the average rate on a 30-year jumbo mortgage was 6.86%. Compare that to this July at 5.48%. This is the lowest we have seen jumbo mortgage rates 2003. Adjustable rate mortgages are another viable option for luxury home purchases now. In fact, clients of ours are closing on a home with a jumbo mortgage this week. They selected a 5/1 arm with a rate of 4.5%.
One think for sure is that buyers face considerably more scrutiny than during the run-up. The days of stated income and stated assets are over. Buyers must have good credit, assets and minimum 2 years tax returns. Lenders are going through financials with a fine tooth comb. Loan-to-value (LTV) rates are a minimum of 75% with most lenders requiring 30% or more down.
