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I would like to help my son and his wife with a home loan by helping him avoid the higher non-conforming jumbo loan rate. What I would like to do is this:
Have the lender make two loans to my son and his wife for the purchased property - (1) one loan for $416k (under the jumbo loan threshold), and (2) another [separate] loan for the remainder or balance of the loan which would be approximately $250k (also under the jumbo loan threshold) with a deed-of-trust I would give the lender for property that is valued much greater than $250k as collateral.
Does anyone know if this sort of loan arrangement is possible? I would think that a lender would view this arrangement as reasonable due to the guaranteed collateral I'm putting up for the portion of his loan above the jumbo threshold.
My son easily qualifies for the full loan amount, however I'd like to help him avoid the higher rate from a non-conforming jumbo loan by [instead] having two smaller (conforming) loans running concurrently. I'm trying to figure out how to help him without me putting up a sizable amount of cash myself, which is mainly in tax-deferred retirement accounts or securities, both of which would have tax liabilities if withdrawn or sold - something I wish to avoid. The thought of me being a guarantor [of sorts] for the portion of the loan in excess of the jumbo threshold amount caused me to think about this method of helping.
Is this something anyone is familiar with? Is it ever done? Any ideas?
I would like to help my son and his wife with a home loan by helping him avoid the higher non-conforming jumbo loan rate. What I would like to do is this:
Have the lender make two loans to my son and his wife for the purchased property - (1) one loan for $416k (under the jumbo loan threshold), and (2) another [separate] loan for the remainder or balance of the loan which would be approximately $250k (also under the jumbo loan threshold) with a deed-of-trust I would give the lender for property that is valued much greater than $250k as collateral.
Does anyone know if this sort of loan arrangement is possible? I would think that a lender would view this arrangement as reasonable due to the guaranteed collateral I'm putting up for the portion of his loan above the jumbo threshold.
My son easily qualifies for the full loan amount, however I'd like to help him avoid the higher rate from a non-conforming jumbo loan by [instead] having two smaller (conforming) loans running concurrently. I'm trying to figure out how to help him without me putting up a sizable amount of cash myself, which is mainly in tax-deferred retirement accounts or securities, both of which would have tax liabilities if withdrawn or sold - something I wish to avoid. The thought of me being a guarantor [of sorts] for the portion of the loan in excess of the jumbo threshold amount caused me to think about this method of helping.
Is this something anyone is familiar with? Is it ever done? Any ideas?
Another thought - I would gladly be a co-buyer of the property with a loan assigned to me for the $250k...and offer to the lender a deed to property owned by me that is valued greater than the loan I would be responsible for.
Lenders aren't really up for creative options these days. Lots of people want piggyback loans for various reasons, and they're becoming harder to obtain.
I would find a good broker who works with outside-the-box lenders. But it's going to be a big hassle and you're going to pay a premium for anything creative, so it might be better to just find a good rate on a jumbo.
Lenders aren't really up for creative options these days. Lots of people want piggyback loans for various reasons, and they're becoming harder to obtain.
I would find a good broker who works with outside-the-box lenders. But it's going to be a big hassle and you're going to pay a premium for anything creative, so it might be better to just find a good rate on a jumbo.
True - you may be right. However, I am hoping my son can find a lender (bank) that will take the $416k loan with Freddie/Fannie and the other loan of $250K in-house with no third party involvement. With a deed for property that I'm willing to put up as collateral for the $250K loan and Freddie/Fannie taking the $416k loan the lender should view the creative loan method as more than viable. The lender would be fully protected on the $250k in-house loan and be lending $416k through Freddie/Fannie on a house that has a value close to $1 million, putting their loan exposure for both loans at zero...but they may not be interested.
You would have a lot more luck shopping for a lender that specializes in jumbos. I have personally seen HUGE variation from lender to lender. Those that specialize in jumbos may have a very small premium.
Any time you have two loans things get a lot more expensive. Any offer to get creative additional collateral /involve more properties is going to turn off almost all lenders.
If you have liquid assets that could be moved / pooled it would really raise more questions.
You say your son can well afford the jumbo -- don't mess that up with "co-borrowers" , guarantors, or anything else that screams differently.
I almost hesitate to mention, but depending on what you may be willing to do, you could probably take our a HELOC or mortgage if you have sufficient equity / fully paid for property and use the proceeds to enter into an "equity sharing" arrangement with your son, but you should be sure you know the pitfalls before deciding that is the best solution. Equity Sharing 101 -- TIC, Equity Sharing and Shared Ownership Knowledge Base
So you want to take out a loan on your own property so your son can get a cheaper rate? Sure, what you do is take out secured loan from a bank with your property as collertral. Use that money as down payment for the house he buys and then his loan amount is less than $416k. He then repays your $250k.
Frankly, I don't think it's wise at all to risk your own property to help out your soon, but to each his own.
So you want to take out a loan on your own property so your son can get a cheaper rate? Sure, what you do is take out secured loan from a bank with your property as collertral. Use that money as down payment for the house he buys and then his loan amount is less than $416k. He then repays your $250k.
Frankly, I don't think it's wise at all to risk your own property to help out your soon, but to each his own.
That would work, but I don't know what kind of rate I'd get. Of course I'm looking for something close to a conforming mortgage rate.
It's not a matter of risk to me, but of being able to help him get a better rate without me having to take cash out of tax-deferred accounts or sell securities that would create tax liabilities. I own numerous properties and the $250k represents just a tiny percentage of my assets. He easily qualifies for the full amount of the jumbo loan but currently has a shortfall of cash needed to get the loan figure beneath the $417k threshold.
If it's too cumbersome for the lender, or I can't get a reasonable rate on the property, he'll just go with the jumbo loan which is not too bad at 6.375% with 1 point and no PMI.
If it's too cumbersome for the lender, or I can't get a reasonable rate on the property, he'll just go with the jumbo loan which is not too bad at 6.375% with 1 point and no PMI.
Well, you should shop around if you need to. At least in CA, my credit union is 6.375 with no points, and BoA is under 6% with less than 1 point.
Well, you should shop around if you need to. At least in CA, my credit union is 6.375 with no points, and BoA is under 6% with less than 1 point.
Yep, he'll be talking with BoA, WB/WFC and two others to compare with the one that has already qualified and pre-approved him. He's under contract but doesn't close until 3/31 so he has some time. He is an attorney so he qualifies for the special loan with no PMI and lower rate. Plus, I would think that most banks would want him as a long-term banking customer.
I would like to help my son and his wife with a home loan by helping him avoid the higher non-conforming jumbo loan rate. What I would like to do is this:
Have the lender make two loans to my son and his wife for the purchased property - (1) one loan for $416k (under the jumbo loan threshold), and (2) another [separate] loan for the remainder or balance of the loan which would be approximately $250k (also under the jumbo loan threshold) with a deed-of-trust I would give the lender for property that is valued much greater than $250k as collateral.
Does anyone know if this sort of loan arrangement is possible? I would think that a lender would view this arrangement as reasonable due to the guaranteed collateral I'm putting up for the portion of his loan above the jumbo threshold.
My son easily qualifies for the full loan amount, however I'd like to help him avoid the higher rate from a non-conforming jumbo loan by [instead] having two smaller (conforming) loans running concurrently. I'm trying to figure out how to help him without me putting up a sizable amount of cash myself, which is mainly in tax-deferred retirement accounts or securities, both of which would have tax liabilities if withdrawn or sold - something I wish to avoid. The thought of me being a guarantor [of sorts] for the portion of the loan in excess of the jumbo threshold amount caused me to think about this method of helping.
Is this something anyone is familiar with? Is it ever done? Any ideas?
YES ! Just give him the best advice you can . And that should be "LOOKS like this is more house then you should be trying to get in to" > So just sit tight and wait untill you find something you really can afford ! Just look around at the many people that ttried the same thing only to wind up loosing the property. also he may qualify for the loan but it sounds like it's still more then he can manage?
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