With jumbo loans making a come-back into the Desert area mortgage market, many a luxury buyers (and sellers) are rejoicing!
But before you dash out and get a loan, you may want to know; Jumbo loans are coming with jumbo buyer requirements.
Specifically – buyers across the luxury home market that are considering a jumbo loan should be aware that large cash reserves are often required for purchases over $417,000.
Some lenders require their borrowers to have a reserve of up to 12 months’ worth of mortgage payments in the bank or liquid assets for purchases from $417,000 to $2 million according to a recent article from the Wall Street Journal Online. For loans over $4 million the figure is more like 36 months’ worth of reserves.
Cash reserves aren’t the only thing super-sized. Down payments are larger on a jumbo loan too. Most lenders require at least a 20% down payment for jumbo loans with some going as high as 45%.
If you don’t quite meet some of those criteria exceptions can sometimes be made. This is especially true if you call on a lender that you’ve done a great deal of business with. Items like reserve amounts can sometimes be tweaked with the right relationship or for a buyer who is strong in other respects such as credit or down payment.
Why the big costs? Jumbo loans represent a larger investment and a larger risk to the lender. Many of these homes are customized, making them appealing to a smaller pool of specific buyers so if the loan goes belly-up the home will be more difficult than average for the lender to unload.
The bottom line: Jumbo loans may require more money in reserve and upfront, but if you’re a strong buyer the luxury market can yield a pretty amazing home!
Whether you’re looking for a luxury vacation, a second home in the Desert, or even miles away from us, I can assist you with your purchase in La Quinta and surrounding areas. Call 760-567-7282.
