The latest on jumbo loans


Good morning! I wanted to update you on the jumbo loan market in Bellevue, WA.

The jumbo loan market is changing. As most of you may be aware, the new conforming jumbo loan limit for King, Pierce and Snohomish counties will be $506,000 the first part of October. This is down from $567,500 and it appears Congress isn’t going to address this issue immediately. If you live in another county besides the three I mentioned above, jumbo loan limits may be different. You should be able to access your county limit via Google search.

Jumbo loans require a loan officer with knowledge and experience in this market. Although underwriting and rates have eased a bit since 2008, jumbo loans are still scrutinized. Most if not all jumbo loans done these days are portfolio’d meaning the lender chooses to not sell your loan and will retainn the servicing rights.

Jumbo loans also often have different programs that make sense. Several of my clients opt for ARM’s that are fixed for the first several years. Why? Pricing for a 5/1 ARM may be at or near 3% as compared to a 30 year fixed rate of closer to 5%. If you have a large loan (say $1 million) you stand to save quite a bit of money by opting for an ARM instead.

Another thing to be aware of is jumbo loans typically require more equity whether you’re purchasing or refinancing. I am aware of one bank that will go to 90% loan-to-value on a purchase (10% down) up to a loan limit of $506,000 plus $250,000) in our area. But you’re probably also going to need a credit score of at least 720 to qualify.

Most jumbo lenders will not go above 80% loan-to-value so you will need to have either 20% equity or a 20% down payment minimum to qualify. Be prepared to also provide documentation to include income (W-2’s and tax returns if self-employed) and assets (bank and brokerage statements) asked for. Time frame to close a jumbo loan is in all likelihood 45 days so plan accordingly.

I’m seeing an increased appetite for jumbo loans which I think is a good sign. I remember in 2008 when the credit markets shut down and every jumbo loan was 8% for a 30 year fixed mortgage. In sum, I hope this has been helpful. Feel free to contact me if I can be of further assistance. Thanks again for reading. Have a great day!

Paul McFadden

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About paulmcfadden

I am a mortgage loan officer with the Legacy Group in Bellevue, WA. I have been in the business for almost five years now and feel very fortunate to work for such a great company that is employee-owned. In my spare time, I love the outdoors and working out, like to read all kinds of things, love spending time with my first grandson Sam, and all things food and wine!
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