I have been working with wonderful people on purchase transactions and wanted to write a quick helpful note about high balance or jumbo mortgage loan products. Higher purchase prices in California’s major cities naturally results in higher loan amounts. To understand how a high purchase price affects your loan, read on!
Fannie Mae (one of the government sponsored organizations that sets the guidelines for conventional loan products) has a useful online tool that lets you look up your county’s limit – HERE IS THE LINK.
For example, Los Angeles County loan limit as of the date of this article is $636,150. This means that with 20% down payment, you would be looking at a maximum purchase price of $795,187. If you wanted to put down 10%, your purchase price would be limited to $706,833 to stay under the conventional loan limits. While this is not a bad range for some areas of Los Angeles, in other areas you might be having a hard time finding a two bedroom condo at this price range.
Purchases above this Fannie Mae limit can still be financed, but you are not in the realm of high balance or jumbo loans. These loan programs have a slightly higher interest rate and some programs I see with down payments of 10% or 5% require cash reserves to offset higher risk of loan default. Some 20% down programs are more lenient on required reserves and also have a very competitive interest rate close to conventional interest rates! So even in lending, cash is king! 20% down will be your best bet at getting a great rate and having a strong offer at that!
Even at higher price ranges, it’s Seller’s market this summer. To help your Realtor submit a great offer, and as part of my follow up process, I call the listing agent on every offer submitted and convey the strength of your preapproval, the general information about you as a borrower (i.e. great FICO in the 750-800 range) with your blessing. This gives the listing agent an opportunity to ask questions and be assured that the offer is strong and will close on time. It also gives the listing agent the confidence that they are going into the sale transactions with a Buyer who is proactive and means business.
Please call if you would like to get started on your mortgage application – I am available at all hours of the day, including nights and weekends. Call direct at 818-512-9926, or email firstname.lastname@example.org.