Advice from Luxury Mortgage: The Rise in Luxury Home Sales and Jumbo Loans
luxury-mortgage Foreign investment plus the recovery of the economy and the housing market are fueling a boom in luxury housing across the U.S., according to real estate and economic experts. Added to this is the strange fact that jumbo loans have been more affordable than 30-year conventional loans. Even middle-class buyers are taking another look at bigger, more expensive housing. Lenders are saying this is a u michael-parisnique event in the history of home financing. The types of homes that fall into this category are varied. Older Americans “treating” themselves to second homes, younger buyers looking for homes they will “grow into,” foreigners investing in U.S. property or moving here because of favorable exchange rates, and wealthy celebrities looking to invest in real estate are driving the trend. Additionally, average Americans are looking to purchase larger homes. Jumbo loans — those that exceed the conforming loan limit of $417,000 in the contiguous 48 states — are experiencing a renaissance of sorts. New and revised jumbo products are helping to ease some restrictions that have made jumbo loans difficult to secure, especially for self-employed or retired borrowers. Then, earlier this fall, rates on jumbo loans fell, making them less expensive than conventional, 30-year home loans. This is practically unheard of: jumbos are not backed by government guarantees, making them riskier than conventional loans to the lenders. So why are they suddenly more attractive and more widely available? Fees on FHA and other traditional loans have been climbing, pushing up the interest rates on smaller loans and ultimately making them more expensive. Plus, banks have been holding back large cash reserves and now seem to be willing to lend more freely and invest in real estate transactions. Together, these factors make jumbo loans more affordable — and so are the larger, luxury homes they fund. It helps to have good credit and a chunk of cash on hand for your down payment, as well as low debt-to-income ratios. But for those homebuyers who were hoping for that extra bedroom, now may be the time to jump into the housing market. People living in high-priced areas, such as large metropolises, now have the option to buy with the affordability of jumbo loans. This could help revitalize depressed cities by raising home prices, enticing move-up buyers and generally improving the areas in which people are buying. Could a jumbo loan be right for you? I invite you to meet with me and look over the numbers. It’s possible a jumbo loan could make more financial sense than a conventional loan for you and your unique financial situation. Contact me today to take a look at the options and availability of jumbo loans in our area!
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