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How do we avoid jumbo loans?

Discussion in 'Home Loans' started by Peaches Delight, Feb 6, 2013.

  1. Peaches Delight

    Peaches Delight Knows the Ropes

    Sep 7, 2012
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    We have been very blessed and expect to be moving somewhere inside the Beltline in Raleigh, as soon as we can make it happen.
    Even with 20% down, which is about all we can do, we think it will put us into a jumbo loan.

    Is there some way to avoid that jumbo loan expense on a home purchase in the $550,000 to $625,000 range? Credit is very good.
     
  2. Jim Enright

    Jim Enright TREF Member

    Feb 6, 2013
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    Hi-
    Jumbo loans begin at $417,001.00

    With 20% down on the home prices mentioned you could
    have a Home Equity Line of Credit from $23,000.00 to $83,000.00 on
    the higher sales price. This is a piggy back.

    Down side- HELOCs are a variable rate loan tied to prime.
    They are low now, but when rates start up, the rates and payments
    will also increase.

    Review both Jumbo and piggy back options.
     
    Peaches Delight likes this.
  3. Peaches Delight

    Peaches Delight Knows the Ropes

    Sep 7, 2012
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    Thanks, Jim!
    Is it harder to qualify for a program like that? Does it drag things out longer?
     
  4. Jim Enright

    Jim Enright TREF Member

    Feb 6, 2013
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    Not necessarily harder.
    You are just adding one more moving piece to the process.

    The HELOC lender will have their own approval
    schedule that your first mortgage lender cannot fully
    control.....though they may be able to influence, depending
    upon the relationship.

    The HELOC lender will also have their own qualification
    guidelines.

    So, allow enough time to get both loans approved, and both
    closing packages to the attorney on time.
     
    Peaches Delight likes this.
  5. Peaches Delight

    Peaches Delight Knows the Ropes

    Sep 7, 2012
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    OK. Thanks Jim.

    Question: Is the HELOC lender always a 2nd lender, or does the same bank handle both loans ever?
     
  6. Jim Enright

    Jim Enright TREF Member

    Feb 6, 2013
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    Your large retail banks will do both, but you've
    got to compare.

    Most brokers and correpsondent bankers will
    use a different bank.
     
    Peaches Delight likes this.
  7. Peaches Delight

    Peaches Delight Knows the Ropes

    Sep 7, 2012
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    Thanks for your help, Jim.
    Mortgages and underwriting are crazy...
     
  8. Kevin Martini

    Kevin Martini TREF Member

    Feb 9, 2013
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    Yes, securing a 2nd mortgage is a fantasic strategy to avoid a jumbo loan however it would also benefit you to look at a jumbo loan. With Client that have strong credit there may be an option to get a jumbo loan without private mortgage insurance with as little as 10% down. The jumbo rates in todays market are very aggressive.
     
  9. Alexis Cooper

    Alexis Cooper TREF Member

    Nov 22, 2014
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    I totaly agree with you.
     

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