Great News For The Jumbo Loan Market

As you are probably aware, the secondary market for jumbo loans has for the most part dried up. The loss of this market has reduced the number of jumbo mortgage lenders who are able to provide loans in this space.

According to Bloomberg Business News, lenders are starting to come back to the jumbo and super jumbo loan market. This article describes how some of the major banks are starting to dip their toes in the water, after being absent for well over one year.

For homeowners and homebuyers in California, especially in San Francisco and San Mateo Counties, this is great news! Not to mention for mortgage brokers like myself, who have not been able to offer a wide variety of jumbo mortgage and super jumbo mortgage products for a long time

Speed Is Essential When Obtaining A Jumbo Mortgage

If you call five different mortgage brokers to get a jumbo mortgage rate quote, chances are you will get five different rate quotes. Why would there be a difference? Is somebody lying?

The reason you might get five different quotes is because the time to process a jumbo mortgage, especially here in California, varies widely.

Some lenders can underwrite your file in one week, another jumbo lender may take two weeks, etc.

Lenders price their loans in terms of time to close. For example, a San Francisco jumbo lender might quote a 6% interest rate with 1 point for a 15 day close, 1.5 points for a 30 day close, and 2 points for a 60 day close.

As you can see, jumbo mortgage lenders offer different pricing depending on the time it takes to close.

As a homeowner or home buyer, what is the best strategy to get the lowest jumbo mortgage rate. The best strategy is to be organized and cooperative.

By being organized I mean giving your mortgage broker, all of the documentation he asks for, and give him the complete documentation. If he asks for all pages of the bank statements, give him ALL pages of the bank statements. Even if a page is blank, or has nothing significant on the sheet, give it to your mortgage broker. He is not asking you for this to harass you, he is asking you for this so he can do his job as efficiently as possible. He knows the lender is going to ask for it, so he asks you.

By being cooperative I mean doing the little things quickly. Return phone calls and e-mails as fast as you can from your mortgage broker. Most importantly, get your appraisal schedules ASAP. Don't worry about having the cleaners come to do a special cleaning. Have the house look presentable without going overboard.

Being organized and cooperative with your mortgage broker will speed up the process and help you get the best rate!

Fix Your Jumbo Adjustable Mortgage Rate

Homeowners with jumbo adjustable rate mortgages, especially in the San Francisco and San Mateo County areas, have recently been enjoying incredibly low interest rates.

For example, many jumbo adjustable rate mortgages are tied to the One Year Treasury Bill. The rate on the One Year Treasury Bill has recently been in the .5% to 1% range. The margin added to this index for jumbo adjustable rate mortgages are usually in the 2% range to 3% range. So most of these homeowners in affluent areas like Burlingame and Hillsborough have been enjoying a rate in the 3% to 4% range.

What do you think the future direction of interest rates are? I think eventually the rates are going to increase because the government is using inflationary techniques to revive the economy. With an increase in interest rates, jumbo adjustable mortgage rates are going to increase.

As a homeowner, how do you protect yourself from these coming adjustable rate mortgage increases?

One way to protect yourself is with a new program we are offering. The program is an agreement to fix your interest rate at a given rate and term, in return for a fee.

Here is an example of how it works: suppose your fully indexed adjustable rate is 3.75%. The offer may be to fix your rate for 10 years at 4.75% (the offer is based on many different factors, most importantly, the terms of your current mortgage).

You make your 3.75% payment to your lender, and then you pay your contract partner the other 1%.

Now, suppose the rate on your adjustable rate mortgage went to 5.75%. You would make your 5.75% payment to your lender, and your contract partner would rebate you 1% to make your rate 4.75%! Clever, isn't it?

This contract is consummated without having to refinance. There are no loan to value percentage restrictions. Most importantly, there is no income verification. It is not a stated income loan - it is not even a loan, it is a contract. Residential and commercial property are eligible in all 50 states. The minimum loan amount is one million dollars.

This program and many other programs for jumbo adjustable rate mortgages can be found here.
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