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!

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