AL and FL Mortgage News

A Jumbo Loan Alternative

April 9th, 2018 1:32 PM by Devin Murray

In the fall of 2017 we posted major updates regarding jumbo loans which highlighted important factors such as credit score, down payment, and income requirements for owners and buyers of primary, secondary, and investment properties.  We announced this because these improvements are unlike anything we have seen since before 2008 for jumbo borrowers.  Now there is one other major exception in 2018 that is yet again changing the market for buyers and existing owners of primary and second homes with balances above $453,100 which is the maximum conforming limit in most of our markets.

Starting March 2018 anybody in Florida or Alabama with a 680 credit score who needs to borrow between $453,101-$679,650 might be eligible for financing with 20% down and avoid meeting the more stringent requirements in place for jumbo loans.  This exception to jumbo is a conventional product called the High Balance Loan.

High Balance For Buyers
If you are buying a primary or second home priced from say $566,375 to $849,000 this means you can put 20% down but get one loan with conventional rates, closing costs, underwriting guidelines, and turn times as long as your loan amount stays below $679,650.  This conventional loan jumbo exception creates a shelter from jumbo rate and cost adjustment factors most notable for hindering those in the 680-719 score range.  There are also "elite status" benefits for those with scores 720 and above so please ask your loan officer to see if you qualify and compare jumbo vs. High Balance rates and costs. 

Aside from rate and costs improvements, the second biggest High Balance advantage are much lower asset and reserve requirements.  Where jumbo loans can require 3 to 9 months in reserves, this conventional option typically only requires zero to a few months per automated findings.  Lower asset requirements mean easier qualifying and more importantly using your money where it counts the most for you. 

While we did not directly mention it previously, most all jumbo loans are manually underwritten meaning that they can be a little more difficult to obtain and take a little longer in underwriting.  (This is not new or a secret in our industry.)  By comparison high balance loans, like any other conventional loan, are underwritten using an automated system and therefore can be closed in about half the amount of time as jumbo loans.  With respect to time automated underwriting means streamlined loan conditions, less hassle, and a potential competitive edge with faster closings than other competing jumbo offers.  

High Balance for Owners
If you have never attempted it before, refinancing a jumbo loan can prove to be far more difficult than obtaining purchase financing.  There are many additional pitfalls too numerous to describe here.  Aside from requirements described with getting jumbo purchase money, finding a lender than is familiar with various jumbo offerings is an important step towards knowing your options.  Secondly receiving a good valuation with an appraisal that is accurate and using fair market comparables is sometimes challenging for properties above $500,000 due to availability in your area.  So, if you owe from $453,100 to $679,650 on your first mortgage and even if you have a second mortgage with a balance up to $84,956 on your primary residence you owe it to yourself to ask about High Balance Refinance Options.   

To find out about these and other options not mentioned here that a High Balance loan may offer you for your scenario do not hesitate to email us.  To find out what the requirements are or to inquire about qualifying call us 888-269-8835 or apply online 24 hours a day.



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