Michael Shotnik, Branch Manager
Colorado Mortgage – www.co-mortgage.com
The Jumbo product has been the last program to benefit from an improved lending environment. As capital tightened, Jumbo products suffered and rates soared. Unfortunately, we’re still in an environment that results in inflated Jumbo rates.
On a positive note, large institutions are looking for something to do with their cash. And as private money floods the market, we see more and more Jumbo products pop up with more competitive rates.
For someone purchasing a home above $417,000 (conforming limit), a decision needs to be made. Do you pursue one Jumbo loan, or break it into two separate loans? There are advantages to each approach; however anytime you can obtain Conforming financing, the terms will most likely be more beneficial than a Jumbo loan. (See the example below.) We’ve compared a Jumbo loan to a Conforming first mortgage in combination with a 2nd mortgage:
As you can see, the comparison sheds light on a very tight assessment. In my opinion, the edge lies with the 1st and 2nd combo because of the funds due at closing. However, there are more questions to be asked:
How long will you be in the home?
How much do you ideally want to put down?
Are you comfortable with a 2nd mortgage?
As in every situation, diligence needs to be done to propose and choose the ideal loan and that’s where we come in. We’ll do our best to ensure we put the most competitive options in front of you and talk through the differences.
Barry Kunselman, a realtor in Denver has this to say, "When I talk to my clients who are in the market to purchase a home over $417,000 many of them are pleasantly surprised how affordable the first and second loan options are. If interests rates go up as projected it makes more sense to purchase a home sooner than later".
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