Jumbo Mortgage Dallas Blog

As in any business certain companies i.e. banks cater to certain products. In this case only a handful of banks who lend in Texas offer what I consider great jumbo mortgage products. Right now loan to value and of course high credit scores are everything. The best products right now for purchases are with 25% to 30% down for non interest only products. I am currently working on a purchase for a couple in Dallas where the sales price is 2M, the bank requires them for a 5/1 interest only product to make a 35% down payment and their rate is 4.25%. If they chose a non interest only product they would have made a 30% down payment. In my opinion this is a hell of deal. This is without any points on the front. Of course ARMS are lower than 30 year fixed, but on a 30 year fixed with 30% down you are looking at 5.75% under the same scenario. Of course these are the optimal pricing situations in our current environment. That being said there are banks who offer a 15% down payment without mortgage insurance with competitive rates. The key to working with a great loan officer is shopping around. Your goal as a consumer should be to locate an unselfish lender i.e. me, who works for a reputable company with relationships with the top mortgage lenders. We make money one of two ways on the front, what you see on the GFE and HUD and on the bank, what the actual banks pays us in yield spread premium. This means if I charged the client 4.375% instead of 4.25% I would have made an additional .5 point on the back. They received a GFE with no points, no broker fee/application fee and a rate of 4.25% on a 1.3M interest only 5 year jumbo ARM. If I were to charge a rate of 4.125% I would have made absolutely 0 on the back. Obviously this is not an option if your not making anything on the front. The next rate of 4.25% paid .5% in this case $6500. This is a win, win situation the clients gets the best possible deal while I make a pretty good commission.

Is there relief in sight for borrowers who want to refinance jumbo adjustable-rate mortgages but have been shut out of the market?

People got paranoid about adjustable-rate jumbo mortgages, or mortgages that exceed $417,000, about a year ago. So many people have them, and there were worries people wouldn’t be able to cover mortgage payments if they reset at higher rates. But now there has been a 180-degree turnaround. For example, the popular 5/1 jumbo adjustable-rate mortgage, which has an initial interest rate for five years and then resets annually, is averaging 6.60%. The traditional 30-year fixed is 7.49%. So even if you want to get out of a jumbo adjustable-rate mortgage and into a fixed-rate mortgage, now is not the best time to refinance. Ride it out, and you will probably save a few bucks if rates go lower.

Super Jumbo Residential Loans are increasingly more difficult to find on Wholesale marketplace for Mortgage Brokers.

By now it would be virtually impossible for anyone to not have heard about the “Sub-prime Meltdown”, “Mortgage Crisis”, “Credit Crunch” or the “Liquidity Crunch”. The current situation has been well publicized, and we have all heard the stories of the individuals who have lost their homes, or are struggling to keep them. These are usually the unfortunate ones that had credit, income documentation, or down payment issues, and ended up in adjustable loans.

The part of the story we don’t hear about very often, is the effect it’s had on the more affluent homeowners. High Net Worth individuals are also finding themselves having trouble obtaining new loans, whether it’s to refinance out of an adjustable mortgage, or to purchase a home. When the rate adjusts on a multi-million dollar loan, monthly payments can increase thousands of dollars. With the slowdown of the residential market, a quick sale for a good price is usually not an option. Additionally, a good number of these borrowers are self employed entrepreneurs who, very likely, are seeing a decrease in their income due to the overall slowing of the economy.

Obviously, everyday people aren’t going to feel too sorry for the business owner stuck with a big adjustable loan on their mansion. Nevertheless, when they find themselves in a bind that their local bank is no longer willing to help them out with, they may turn to a Mortgage Broker. Long gone are the days of easy loans of this magnitude, especially in the Wholesale marketplace. Super Jumbo Mortgages were some of the first types of loans to have guidelines tightened, with many lenders cutting them out entirely. Placing these loans can be an extremely frustrating experience for the Broker since your dealing with solid client. Who might not get the mortgage they deserve because of the current lending environment.

In this post I will outline the best jumbo mortgage programs for specific loan amounts and loan to values. Assume a credit score of at least 700 is needed for all transactions. We will look at 10%, 15% and 20% down options. There are thousands of scenarios but this will give you a good guideline of the best programs out there. Keep in mind rates change daily and this is snapshot in time. There are interest only options as well as adding a prepayment penalty for a lower rate. I do not recommend adding a prepayment penalty, your rate will only be 1/8th lower. The benefit versus the potential cost just is not there for me. This is a cross sample of programs from 3 different banks.

The first Bank we will look at requires a at least a 20% down payment and has excellent rates on 3, 5, 7 year ARMS.

If your loan amount is between 417K and 999,999 these are the current ARM rates with 20% Down.

3/1 ARM 6.125%   5/1 ARM 6.25%  7/1 ARM 6.375%

If your loan amount is 1 Million to 1,499,999, these are the current ARM rates with 30% Down

3/1 ARM 6.375%  5/1 ARM 6.5%  7/1 ARM 6.625%

If your loan amount is 1.5 Million to 2 Million these are the current ARM rates with 40% Down

3/1 ARM 6.125%  5/1 ARM 6.375%  7/1 ARM 6.625%

The second bank has the best program bar none if your situation falls within the parameters.  This bank requires at least a 15% down payment and the loan amount must be from 417K to 900K. There is no mortgage insurance on these mortgages and no hits to the rate for a cashout. They will finance from a score as low as 650, but we will use 720 as our score for the pricing below. For loan amounts between 750K and 900K add .3 to the rate.

For loan amounts between 417K and 750K these are the current ARM rates with 15% down

3/1 ARM 5.75%  5/1 ARM 6.1%  7/1 ARM 6.35%

For loan amounts between 417K and 750K these are the current ARM rates with 30% down

3/1 ARM 5.05%  5/1 ARM 5.45%  7/1 ARM 5.95%  10/1 ARM 6.65%

15 year 6.45%  20 Year 6.45%  30 Year 6.7%

The 3rd bank we will look at has great pricing on jumbo mortgages with 10% down. A credit score of 700 is needed and the loan amount can go up to 1 Million. These mortgages do have mortgage insurance, but you will not find a better rate with only 10% down on a jumbo mortgage.  

3/1 ARM 5.375%  5/1 ARM 5.875%

If you have any pricing or qualification questions, give Josh Kohl a call at 512 342 1069.

My client is mulling another option that recently became available by the bank of a 3/1 ARM. The ARM has a rate of 6.75%. This will save the client more than $1700 per month. The client is mulling this because his children will be in college by then and they will likely downsize. To note, the the difficult aspect of this jumbo mortgage was finding a lender that will go over 1 Million at LTV up to 80%. I have fortunately found two.

Josh K.

Josh K

Jumbo mortgages especially over 1 million continue to see the Loan to Value reduced. Not too long ago LTV’s for these super jumbo loans were anywhere from 80% to 85% now almost every bank out there has a 75% or less LTV. I work with two wholesale jumbo mortgage lenders who will go up to 80%. The first has one lien at 80% and the second lender has 75% first with an outside second. The deal I am currently working on is refinance. The client is on 8.5% first lien of 888K and a 12.5% second lien of 200K. I will be able to put the client on 1 lien of 1.1 million at 7.875%. This refinance will save the client almost 1K per month and give him a two month break in payments. Keep in mind for such a transaction credit scores have to be over 700 and 6 months worth of PITI reserves has to be documented. No matter what your mortgage is, a thousand dollars a month is a thousand dollars a month.

Josh K.

I am working with client who is refinancing her jumbo mortgage and pulling out cash to pay off her Hummer and Corvette with cashout from her mortgage. The client is currently on a 6.9 fixed rate and wants to refinance to a 5/1 ARM @ 6.8% with no prepayment penalty. Her goal is include the debts of both cars into the mortgage refinance. This is great loan because she plans to sell the home in less than 5 years and to include the two cars as part of the refinance and this will save her $1200 a month. Please contact us with any jumbo mortgage questions.

I am working on a Jumbo mortgage purchase for a Gentleman who is buying a 1,400,000 dollar home. He is making a 400,001 down payment and wants a 7/1 Interest Only Adjustable mortgage. He is qualified full documentation and his mortgage rate is 6.5%. His mortgage payment will be 5,411/month. In the current mortgage environment it is important to get in touch with a jumbo mortgage planner who knows which banks offer the best jumbo mortgage rates. Please contact us with any rate or guideline questions in regards to jumbo mortgages.

Hello potential clients of Texas. I wanted to write a post about Jumbo mortgage rates, why I think you should go with my company and how brokers make their money. First of all Jumbo mortgages are a completely different type of mortgage than a conforming mortgage. They are non conforming mortgage meaning they exceed 417K. This poses a problem with a majority of banks now because they are becoming increasingly difficult to sell on the secondary market. Because of this, rates are higher and the costs are higher with your general bank. This is all fine and dandy because there are still banks out there who desire these particular loans. For example I work with over 40 banks and 6 of them fit this mold. Last year the number would have been closer to 30. The banks with the most aggressive Jumbo products have portfolio lending which means they actually hold on to the loan and do not sell the financial instrument on the secondary market. The trick for the mortgage planner is to know which bank to work with in terms of the loan amount, loan to value and credit score. This seems easy, but I can assure from researching these loans for years is not. The key is not only to partner up with someone who has access to many lenders but knows exactly which lender is good at what and keeps track of which lender might be trying to buy the market that week or that month. Jumbo mortgage applicants generally have a pretty keen financial eye, with the exception of some athletes and entertainers. Thus as a consumer its your job to find the perfect deal which will consist of lowest rate and lowest closing costs. Working with someone who does their research is also a big plus. Your ideal loan officer will be on 100% split and have low overhead. They can charge less and still make the same money. Do you think two mortgage guys who have local Dallas radio shows on AM have low overhead? Now here comes the fun part how brokers make their money. Brokers make their money one of two ways, on the front or on the back. On the front brokers make money in origination. They may also charger a broker fee, but this most of the time is a legitimate fee that goes to the actual broker of the company. On the back of the loan the broker makes (Yield Spread Premium). To simplify this, it means the mortgage planner raises the rate above par in order to make more $. Par rate reflects the lowest amount of YSP before there is an actual cost to the broker for rate. Now obviously the process takes around a month from start to finish and no one expects some to work for free so money has to be made somewhere. When a clients sees a Good Faith Estimate with no points they assume they are getting a great deal, which they may. In reality the mortgage planner is making all their money by charging you a higher rate. Truth be told, with a Jumbo mortgage an eighth or quarter of point has a great effect on your monthly payments due to the sheer size of the amount financed. Here is an example of one the best Jumbo mortgage lenders rates. US Bank with a 15% down payment has some of the best rates in our country. They do not charge for interest only (.25), waiving escrows (.25) and big one, they do not charge mortgage insurance. They are one of two banks that has such an aggressive Jumbo program. I would tell you about the other but I cant give away all my secrets. Here are US Banks par rates as of today. This is based on a credit score of 720 and loan amount 750K or less.

3/1 ARM 5.7%

5/1 ARM 6.5%

15 Year Fixed 6.65%

20 Year Fixed 6.7%

30 Year Fixed 7.15%

On a deal like this 1 point would be charged. Keep in mind if you factor in the savings of the escrow waiver and interest only if you choose these options then you are getting a par rate with half a point on the front. Also you have no mortgage insurance, which will save you at least a couple of hundred dollars a month alone. Banks offer what I would say are pretty good deal up to 3 million dollars. Be prepared for at least a 10% down payment. Your credit score is very important. There are big hits for scores under 720. If you have to nice home and your credit score is a 650 be prepared for higher rate and larger down payment. As always if you have any questions about guidelines or rates, please send me an email josh@jkohlmortgages.com.

Josh Kohl