Jumbo Loans

CREDIT SCORE: In order to get Jumbo Loans-conforming Fannie Mae or Freddie Mac loan, a person must be in good credit standing with a tri-merged credit score of about 640 and above. Sometimes there are exceptions to this as we have gotten people with 620 scores jumbo loans. If you believe your credit is not up to where it should be, you may still be able to get a jumbo loan but do to the circumstances, you may get a higher rate or have to pay more closing costs. If you think your score needs improvement, please take a close look at our section on (Credit Scores). However, if you have a very good credit score such as 740 and up, you will have a much easier time getting jumbo loans. In fact, you may not even have to worry about debt ratio at all.

DEBT RATIO: For jumbo loans a person should not be spending no more than 36% of their available gross monthly income on their fixed expenses. However, sometimes these rules can often be bent if the loan still looks good. Many times a person with a 40% debt ratio can be accepted depending on other factors. Debt Ratio expenses include credit cards, auto payments, other mortgages, student loans, and/or any other type of installment or credit line with a promise to pay. Often it does not include cell phone payments, other phone bills, cable, food, water, utilities, or any other debts the the borrower did not sign a promise to pay for. If you believe your debt ratio is too high, you may still be able to get a conforming jumbo loan but do to the circumstances, you may get a higher rate or have to pay more closing costs. If you would like to improve your debt ratio, please Contact us at info@mortgages-mi.com and we'll take a look at some ways to get your debt down. You may be pleasantly surprised how much money you can save by paying off credit cards and other expenses with the equity in your home. The greatest part is the interest payments from your jumbo loans are tax deductible, unlike credit cards and other expenses. So most of the time it is the best financial move to consolidate by using some of the equity in your home. However, if you credit score is 740 or better, you may be able to get past the debt ratio requirements but your rate may be .125% higher

INCOME: In order to get jumbo loans, a person needs to prove income. This can be done in several ways: Providing last 2 years W-2 forms(the best way for the typical employee), Providing last 2 years tax returns (A must if self employed, bonus income, commission income, or a person's business income is needed), Providing a Verification of Employment (VOE), and or the last 2 pay stubs for the borrower. Since income is used in calculating debt ratio, it is extremely important that this information be as accurate as possible from the start. However, once again if your credit score is 740 or higher, we can often get past this requirement for jumbo loans, but your rate may be .125% higher.

LOAN TO VALUE(LTV): For jumbo loans, a borrower with an excellent credit score can borrow up to 95% LTV for a purchase or a refinance up to $500,000, 85% up to 650,000, 80% up to $1,000,000. After that the max first loan amount is usually 60% LTV up to jumbo loans of $2,000,000. There are other programs we can use for higher jumbo loans but we would not classify them as normal conforming jumbo loans at this time. Remember, anytime you borrow a single 1st mortgage loan greater than 80% of the value of the home, you will be required to pay Private Mortgage Insurance or (PMI). The percentage that you are charged for PMI is based on the LTV of the first loan. PMI is not tax deducible and unless necessary, should be avoided if possible. The good news is that we can often keep our clients from paying PMI insurance by doing a 1st mortgage loan at 80% LTV and a second loan for the remainder. The bad news is that second loans cost money, the rates are usually a little higher, and since we keep our margins tight, the extra costs are often passed off to the borrower. The good news is that if it costs you an extra $1000 and you save $200 a month, it would only take you 5 months to get your money back. Therefore doing a 1st and 2nd loan makes perfect sense. Keep in mind if your loan amount is higher, we may be able to cover most or all of these extra costs.
Back to Top

30 YEAR FIXED- (360 months)The most common jumbo loans are designed to keep your payments relatively low by amortizing them over 30 years. Throughout the life of the jumbo loan there is a slightly increasing amount of principal dollars each month put in with each an every payment. This means slowly over time your principal portion of your payment grows while your interest portion decreases. Because it is amortized over 30 years this process is very slow. Therefore we recommend this loan only when finances are limited, qualification is difficult, or when the borrower knows they will stay in the home for a long time and desires a low fixed payment. We do not recommend this loan for persons staying in the home for 5 years or less. Most banks, lenders, and other brokers have an increase from .25% to .50% in rate for a jumbo loan versus a normal conventional loan of $359,700 or less because the wholesalers they work with have increases to them. However, our increase is usually only about .125% and if you catch it at the right time, sometimes the rate is same as a conventional 30 under $359,700. Why? because we have been in business for over 20 years and we know where to get the best pricing, we don't have a lot of marketing overhead to cover, and we're not greedy. There are usually few if any closing costs associated with these jumbo loans.
Back to Top

15 YEAR FIXED - (180 months) The second most common of the jumbo loans. This is the number one loan that we recommend, if affordable, as it is usually the perfect balance between principal and interest payments. Often you will get a rate of about .375% or more better than the jumbo 30 year fixed. Therefore many times if you can afford it, the drop in rate helps to offset the increase in principal payment. This loan will save you hundreds of thousands of dollars so if you know your going to be in the home and can afford this higher payment, it will serve you very well come time to sell. In addition, your home is usually the best investment you can make so why not put as much principal down as you can and save on interest. Closing costs are usually few if any for this type of loan.
Back to Top

5 YEAR ARM - (360 months) We usually only recommend this loan for the individual who knows they are moving in less than 5 years or by some chance plan on paying it off. However, many times our financially secure borrowers like this loan to free up some capital for other things. The rate or this jumbo mortgage is usually about .125% higher than a normal conventional loan size. But fortunately there are few if any closing costs due to the loan size.
Back to Top

3 YEAR ARM - (360 months) Just like any arm it can go up about 2% per year after the 3-year term is up though usually .25% to .375% better in rate than the 5 year jumbo arm. We only recommend this loan for individuals who are going to move in the near future or know there finances are going to improve substantially and need the extra cash flow right now. Keep in mind that the revenue paid to the broker by the wholesale lender on these 3 year arms may dictate that more money will be needed from the borrower to cover closing costs if your trying to hammer down the rate. Otherwise most often, we can still do this loan like the other jumbo loans at cost free.
Back to Top

5 YEAR INTEREST ONLY ARM - (360 months) These loans are best suited for the person who has plenty of capital to work with or is going to move in 5 years. However, most of the time the person who has little cash flow is the one requesting them. After the term expires on these loans they turn into a normal principal paying arm and can go up about 2% each year for the next 3 years. Therefore should you get near the expiration, you could be facing a significant jump in monthly payment. In addition, since the borrower has made no dent in the principal of the loan, it could be disastrous. Therefore we recommend these loans with caution for persons who know there cash flow will get much better or know they are going to move within the specified period of time. The good news is most often we can do these jumbo mortgages free of charge.
Back to Top

3 YEAR INTEREST ONLY ARM - (360 months) Same as the 5 year interest only but usually .125% to .25% better in rate. This is about as low as a person could get their payment. If you wish to calculate your interest only payment here is the formula (Loan Amount multiplied by Interest Rate divided by 12 months). Keep in mind that this will not be your actual payment if your property taxes and home owners insurance need to be escrowed. As you can imagine this loan is one of the the worst revenue providers to the broker therefore even with a large loan amount, some closing costs may be required.
Back to Top

OTHER JUMBO LOANS - There are actually many other jumbo loan programs offered by some of our lenders. Such as a 7 year jumbo arm. However, most of them don't really make sense unless your in a very unique situation with your credit score, proof of income, debt ratio, or other type of dilemma. Therefore we will always try to stick to the basics first as the programs above represent the best value to the borrower and to us. If you wish to find out about other programs or just want to inquire about one of the programs above, please contact us at the e-mail address below.
Back to Top

MORTGAGES - MICHIGAN - JUMBO LOANS - JUMBO MORTGAGES

Best Jumbo Mortgage Loans in Michigan and the U.S.

JUMBO LOANS $359,650 - $2 MIL

JUMBO LOANS GUIDELINES AND LIMITS