According to the National Association of Realtors sales of homes in the $750,000.00-$1,000,000.00 range are up 38.7% from a year ago and the $1,000,000.00 and up range are up 25.7%.So why the sudden surge in luxury homes in the Desert?
One big player in that game is the reappearance of Jumbo loans.
These loans cover purchases of over the FHA and Fannie Mae maximum of $417,000.00.
Jumbo loans aren’t a new type of financing; but were all but completely impossible to find after the bubble burst in 2008 due to a lack of secondary market purchasers. Recently they’ve been coming back in a big way: for the four weeks ending February 22nd, new jumbo activity was up 60% from the same period a year ago, according to Mortgage Daily.
Recently interest rates for Jumbo loans were close behind those of conventional loans, a phenomenon that is pretty uncommon. Because these loans aren’t backed or guaranteed by the government they pose a larger risk to the lender, which means in turn that they generally carry a higher interest rate.
So who is eligible for a Jumbo loan? As stated above they pose a greater risk to lenders than conventional or other types of loans, so the qualifications for approval are much more stringent. A person who qualifies for a Jumbo loan probably has a credit score of at least 760, a bank account sporting a years’ worth of mortgage payments or savings, 30 percent down payment, etc.
With good interest rates and more lenders willing to make a Jumbo loan things are looking up for vacation markets across the country.