Jumbo Mortgage Loans Charleston SC
Here in the Charleston, SC area it is no mystery that we have some very expensive residential luxury real estate, and unless borrowers have the cash to pay for it, often times they need jumbo loans. There are countless beach and water front homes on Kiawah, Seabrook Island, Daniel Island, Sullivan’s Island, Folly Beach and Mt Pleasant as well as homes downtown Charleston SC that exceed $3Million. Click see the latest updates on interest rates and lowest current mortgage rates.
A jumbo mortgage loan is one where the amount borrowed is above conventional conforming loan limits. This standard is set by the two government-sponsored enterprises Fannie Mae and Freddie Mac, and sets the limit on the maximum value of any individual mortgage they will purchase from a lender. Fannie Mae (FNMA) and Freddie Mac (FHLMC) are GSEs (government sponsored entities) that purchase the bulk of U.S. residential mortgages from banks and other lenders along with the FHA, allowing them to free up liquidity to lend more mortgages. When FNMA and FHLMC limits don’t cover the full loan amount, the loan is referred to as a “jumbo mortgage” in which private investors are in the marketplace to provide these necessary funds. The average interest rates on jumbo mortgages are typically higher than for conforming mortgages due to the inherent risk the investors are taking on riskier backed assets. On October 1, 2011 the jumbo conforming limit of $729,750 in “high cost” areas was reduced to $625,500.As of 2010, the limit on a conforming loan in “general” areas was $417,000 for most of the US, apart from Alaska, Hawaii, Guam, and the U.S. Virgin Islands, where the limit was $625,500. The limit in “high cost” areas was $729,750 and $938,250, respectively.
Jumbo mortgage loans are a higher risk for lenders. This is because if a jumbo mortgage loan defaults, it may be harder to sell a luxury residence quickly for full price because less of the population can afford pricier homes. Luxury prices are more vulnerable to market highs and lows in some cases. That is one reason lenders prefer to have a higher down payment from jumbo loan seekers. Jumbo home prices can be more subjective and not as easily sold to a mainstream borrower, therefore many lenders may require two appraisals on a jumbo mortgage loan. The interest rate charged on jumbo mortgage loans is generally higher than a loan that is conforming, due to the higher risk to the lender. It can be more expensive to refinance a jumbo loan due to the closing costs, because taxes, insurance and other related costs are so much greater. Some lenders will offer the service of an extension and consolidation agreement, so that a jumbo refinancer will not have to pay for mortgage tax again on the same principal balance. In other cases, title insurance companies will offer up to a 50% discount, often required by law for those refinancing within 1 year to 10 years. The largest discount is for refinancing within one year. Some consumers seeking a jumbo mortgage choose to seek advice from a competent professional familiar with jumbo mortgage loans.
OPTION 2 – Some investment brokers and/or large investment firms will lend money to their clients for jumbo luxury loans but secure it against liquid assets they manage for them. Often times these loan are lower in cost since their is collateral backing the loan to the borrower.