Data from the Mortgage Bankers Association reports that in January residential purchase loans between $1 million to $5 million were the fastest growing share of the mortgage market. Wealthy borrowers are looking for these larger sized loans now as luxury home prices increase and lenders attract them with competitive loan programs.
Due to the fact that first-time homebuyers find it hard to get approved for mortgages even 6 years following the housing crisis, lenders are offering more multi-million dollar loans to affluent borrowers who create far less risk due to their reserves and stable income. This category of home buyers are utilizing the mortgages to buy high-end homes in cities such as Scottsdale, Seattle, Los Angeles, San Diego, and South Florida where real estate prices have been rising.
Many lenders have witnessed resilient appreciation in numerous coastal markets on the east and west coast. With the U.S. stock market making record highs and an improving economy more borrowers are able to handle the payments for super jumbo mortgages.
In Newport Beach, CA where the median home price is $1,312,700 the rising economy and lower unemployment rate can be drivers of growth in home prices similar to San Francisco where technolgy companies and infusion of venture capital has propped up prices.
Lenders are attracting affluent borrowers with programs that feature lower down payments and accepting collateralized assets or simply 12 months of bank statements. Many of these loans are portfolio types which means the banks maintain the loans, and they don’t pay guarantee fees to Fannie Mae and Freddie Mac.
As an example, a borrower wants to purchase a home for $2.35 million they can now get a mortgage up to 85% or $2 million and still secure a great rate under 4 percent. While Freddie Mac says the average interest rate for a 30-year fixed mortgage was 3.76 percent.
Another great program offered is 90% financing up to $3 million using creative financing. Borrowers seeking these benefits will need to have a 760 score and most likely 24-36 months of PITI in reserves. There’s also a $4 million dollar loan on a second home with just a 680 credit score and 40% down is another stand-out loan vacation home buyers like.
Borrowers can apply for the above loans directly at this website or seek numerous alternative options right here at iJumboLoan. Since the mortgage crisis has passed, larger banks are researching the most profitable loans they want on their books. The jumbo consumer is attractive not only as a solid borrower, but also as a client in their wealth management department.
The amount of loans between $1 million to $10 million to purchase residential single family residences in the 100 largest metropolitan areas soared to 25,403 in 2014, which was ironically the highest level since 2007. This is based on real estate data from CoreLogic.