Course Outline
- JUMBO MORTGAGES – Introduction
- Do you actually need a JUMBO mortgage? Try to work with what you know
- JUMBOS are different (Why are they different?)
- Different ways of funding JUMBOS – Sources
- Property Valuation (Collateral) – Appraisal considerations
- QM vs NON-QM (underwriting regulation)
- Asset rich, but “income poor”
- JUMBO- Pre-Approval vs. Underwriting Approved
JUMBO MORTGAGES – Introduction
- JUMBOS are Big Loans
- My first JUMBO! Started out as a ranch loan- ended up a cash-out refi JUMBO high value residence (David Boye)
- The Old Man and the Sea (Ernest Hemingway)- Get’s destroyed chasing a “big fish”
- Fannie / Freddie Limit is $766,550 in 2024
- VA Limit much higher (No Limit)
- Fannie-Freddie FHA, VA, USDA RD, etc.… a source for money with great rates, most common experience for most people to remember the experience, non JUMBO though
- Needing a loan vs wanting a loan but already awesome – already awesome? Then shop some, “need a loan” because you don’t have that much money… do the work, get the loan
Do you actually need a JUMBO mortgage?
- Can you combine 2 Conventional Loans?
- Can you get a 2nd behind a Max Conventional?
- Using easier loan products will result in a higher % closing and possibly better terms for the client
- Can you use expanded VA / FHA Multi-unit options?
- Can you use some Stock Portfolio Lending combined with Conventional Loans?
- Can the Seller finance some of it?
- Can the deal be split into multiple parcels with unique loans on each?
- Several small loans may be better than one big loan
JUMBOS are different (why are they different?)
- Lenders can have their own guidelines for their own money, as long as they follow the law
- The rates and costs are unique and often marginally less attractive than Conventional / Government Loans (although they can be equally competitive at times) – unless you are royaly awesome, then the terms could be “BETTER”
- Loan to Value Ratios can be different
- Credit Score requirements are typically more stringent
- Usually borrowers are expected to have RESERVES
- The larger the loan (ie- millions on upward)… the more conservative the credit allowance, the more conservative the LTV (Loan to Value Ratio), the more conservative the DTI (debt to income ratio)
- Lenders can be loaning their own money (money placed by depositors) – their lending capabilities will vary depending on their deposits at the time the borrower applies “in-house” not always better
- Lenders can get money from publicly traded sources (Priced as: Treasuries, Fed Funds, CMT, etc.…)
Different ways of funding JUMBOS- Sources
- VA / FHA Multi-Unit- Best rates / Terms
- Portfolio Lending (Federal Credit Union, Individual Wholesale Lender Loans) – loans underwritten exclusively by the lender funding the loan
- Doctor Loans, loans to occupational classes
- Farm Property Loans
- Secondary Market Loans
- ARMS v. Fixed (Jumbos can me more attractive as ARMS than conventional)
- Note- the variability of terms on JUMBOS is much greater between lenders than it is with Conventional Loans – Rates / Cost / Approval Conditions
Property Valuation (Collateral) – Appraisal considerations
- Large values (Multi-million) can sometimes take 2 appraisals to confirm the value
- Properties under 40 acres = Deed of Trust … Properties over 40 acres = Mortgage in MT
- Furniture / Special Effects cannot be included in the property value
- Some JUMBO lenders have 10 or 20 acre restrictions
- Some JUMBO lenders have excessive land to home valuation restrictions
- Some appraisers are not licensed / insured for over $1 million properties
- Why is the property worth so much?
- Are there multiple parcels involved, and can they all be tied to the one loan?
Final Points – JUMBOS
- QM vs NON-QM (underwriting regulation)
- Asset Rich, but “Income Poor”
- Trust Funders (Is it their Money?)
- JUMBO- Pre-Approval vs. Underwriting Approved
- Ask!! Dig!! Do much more upfront investigating
- Don’t let the Whale Get Away! Get help and then CLOSE!
