APRIL ISSUE: The Mortgage Panel: Do mortgage interest rates really affect the jumbo loan buyer?
A group of San Diego’s top Mortgage professionals, who specialize in the luxury market, sharing their expertise and answering borrower questions.
QUESTION: Do mortgage interest rates really affect the jumbo loan buyer?
<<“Mortgage rates can have a significant impact in a couple of ways. A small difference in interest rate can create thousands of dollars in excess interest over the life of a loan due to the mere size of jumbo loans (>$562,350). Another impact is to keep a borrower’s debt-to-income ratio in-line with underwriting guidelines. Some borrowers need to select a 7/1 or 10/1 ARM which carries a lower interest rate for qualifying purposes while saving money during the first 7 to 10 years.”
Bill Gaylord CALIBER HOME LOANS firstname.lastname@example.org
>>“Interest rates are very important to the higher end San Diego home buyer. These buyers typically utilize jumbo loan financing (loan amount greater than $562,350) to close their purchase transactions. Even a minor change in the interest rates, can create a material change to the monthly payment on a jumbo loan. Additionally, as rates fall, the affordability level of higher priced homes expands to a much larger pool of potential qualified buyers. It is very important that potential buyers get pre-approved by a lender that specializes in jumbo loan financing.”
Kurt Olson EVERBANK email@example.com
<<“Mortgage rates absolutely affect the jumbo loan buyer simply because the amount you are borrowing on a jumbo loan is much higher. Jumbo loans are also generally harder to qualify for and require a lower debt-to-income ratio so every 1/8 of a percent in the interest rate can have a large impact on the buyers finances and qualifying criteria. The great news about jumbo loans is that there have been many investors pouring into this market which have increased the amount of loan products available to the jumbo buyer. We have also seen an increase of product in the non QM sector which have allowed us, as lenders, to become more creative in finding “homes” for our jumbo clientele.” Chaz Hinz NEW AMERICAN FUNDING Chaz.Hinz@nafinc.com
>>“While mortgage interest rates fluctuate daily they tend to move less frequently for the jumbo market. A jumbo buyer tends to be less constricted when it comes to mortgage interest rate increases. The main reason is that they tend to have stronger disposable income after the mortgage payment. This in turn gives them the ability to absorb a 1% rate increase. This equates to anywhere from a 10-15% payment increase. However, I don’t know anyone who doesn’t like to save money. The question of “What rate do you have?” tends to be overheard at every dinner party no matter one’s financial status.”
Michael Radi PRIMELENDING firstname.lastname@example.org