Is a 90% loan to value jumbo loan right for you?
If you are in the market for a home that is above $700,000 purchase price, a traditional loan might not be the best option. In this case, a jumbo loan is really what you want.
Jumbo loans don’t fall into the same categories or rules that most Fannie Mae and Freddie Mac loans require.
They are a monster all on their own.
These loans at a larger loan amount than conventional loans (Loans under $424000), have requirements and qualifications which are also higher. Usually, only those with higher credit scores and strong finances can qualify for a jumbo loan and the cost associated with a jumbo loan can also be more. But, does that mean that you have to have a 20-50% down payment? Not anymore.
Jumbo loans can get you the home of your dreams and there are several options for a 90% loan to value jumbo loan, but not everyone can offer this. This is actually a rare type of loan that only certain qualified lenders have the ability to offer. This loan-to-value option, meaning that the ratio of a loan to the value of the home purchased would be a 90%, allows for 10% down payment and even eliminates the need for mortgage insurance.
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So how does it work?
There are several different options. You can go with a piggyback financing which offers available purchase price up to $1.9 million. The first mortgage is usually a fixed rate loan while the second mortgage carries the additional 10% or more. You can also get a single loan with no private mortgage insurance up to $2.2 million for a 30 year fixed rate mortgage or adjustable rates 5 year, 7 year and 10 year are also available.
Are there any negatives to this type of loan?
There are not a lot of negatives to this type of loan, but you do need a higher credit score and a good financial standing. The investors on these programs look very carefully at the ability to repay and you may feel there are many hoops to jump through before they actually approve and then FUND your loan. Plan on about 30 -45 days from start to finish once you get into escrow for a purchase. These mortgages are not just for buying extravagant homes because most homes in Southern California naturally run over a half million dollars. With a smaller down payment and depending on purchase price could put you out of reach for an FHA, Fannie Mae or Freddie Mac option, so If you’re looking to buy a home over $700,000 – up to 2.2 Million, a 10% down jumbo loan might be ideal.
Give me a call; let’s figure out the numbers and see if this works for your needs, budget and financial situation.