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My husband and I are looking to move up to a nicer house here in south Florida. If we sell our current home for $500K we should see around $200K from the sale (after commissions, etc.). We are looking to purchase a home for around $700K which leaves us with $500K to finance.
We would like to take out a 15 year loan. Our monthly income is $25K (not including any bonuses), we have $700 per month of recurring debt (car loan) outside of our mortgage and very high credit ratings. I do not anticipate trouble getting a loan, but I am confused about the terms we can expect.
Since we will need to finance $500K we would need a jumbo loan (conforming limit is $423K here). I am hearing that banks are requiring 40% down payments for Jumbo loans. Is that true for all Jumbos, or does it vary by individual case? Will taking a 15 year loan allow us to make a slightly lower DP and still get the loan? We could put down another $80K but we would have to liquidate some investments to do so.
We have a relationship with a small local bank. Are they likely to be more accommodating than the big box banks? Any ideas?
My husband and I are looking to move up to a nicer house here in south Florida. If we sell our current home for $500K we should see around $200K from the sale (after commissions, etc.). We are looking to purchase a home for around $700K which leaves us with $500K to finance.
We would like to take out a 15 year loan. Our monthly income is $25K (not including any bonuses), we have $700 per month of recurring debt (car loan) outside of our mortgage and very high credit ratings. I do not anticipate trouble getting a loan, but I am confused about the terms we can expect.
Since we will need to finance $500K we would need a jumbo loan (conforming limit is $423K here). I am hearing that banks are requiring 40% down payments for Jumbo loans. Is that true for all Jumbos, or does it vary by individual case? Will taking a 15 year loan allow us to make a slightly lower DP and still get the loan? We could put down another $80K but we would have to liquidate some investments to do so.
We have a relationship with a small local bank. Are they likely to be more accommodating than the big box banks? Any ideas?
Be very careful with homes over $500K in Florida. The jumbo loan market is horrible. Take it from someone who was in your similar situation last year shopping for homes. We actually settled on a home that was 550k and put a little more than 20% down to get a mortgage that was conventional ($417K).
$417K is the absolute key number in most parts of Florida. That is the number Freddie/Fannie will buy.
Like you, we have a monthly income in the high 30s a month. No debt. Credit score in the 800s. Massive cash for downpayment. We looked for homes in the 700-800K range. But I wasn't wanting to put $300-400K cash down for a home. I'd rather save some of that money and invest it somewhere else. Which is a good thing I did because the stock market has exploded since it's March 9 2009 low point.
This is what you will encounter:
Even if you put $200K down into a 700K home ,you are still outside of that $417K range. There's very little difference in terms of the interest rates you will be paying from $500K to $600K. But there's a big difference in mortgage interest you will be paying from 417k to 500K.
What does this mean for you? If means that 30% downpayment you put down doesn't mean much to your mortgage rates. We were getting quotes in 6.5-7% range for a 7 year ARM. The 30 year fix were even more ridiculous. I can't remember the exact rates but it was close to the mid 7% rate even with 30% down.
Private lenders (that's all that's available if you are out of the $417K mortgage ranges) are very afraid of Florida. That's why even with 30-40% down, you are still looking at much higher interest rates than conventional (which are going in the high 4%/low 5%).
My friend who is a plastic surgeon is also in a similar situation in Florida. They wanted a 700-800K range home. They have a close relationship with their small community bank (they have business and personal accounts there). Still getting very unfavorable rates quoted. Now they've shifted their thinking and targeting homes in the low 600K range. You will still find fantastic homes in that range.
My advice:
1. If you've noticed, those homes listed in the $600K and up range are just sitting on the market in Florida. You may have one home that was 1 million and selling for in the $600-700K range that may be swooped up fast. But those are mainly cash buyers or people willing to put so much money down to avoid the jumbo market.
2. If you are dead set on getting a home in that price range, be prepared to pay higher interest rates.
3. Get a home in the $550-600K range where your 200K downpayment can get you to that 417K rate.
We already own a home in the $500K range. It's hardly worth moving if we can't move up. We can put more money down if we need to do that. Did you look at 15 year loans? Was there a difference in the rates?
We already own a home in the $500K range. It's hardly worth moving if we can't move up. We can put more money down if we need to do that. Did you look at 15 year loans? Was there a difference in the rates?
I'll have to email my mortgage broker personal friend tomorrow on the rates. We strictly looked for 30 year loans. But the rates for 30-40% down were the same and those were all ARMs. Hopefully other mortgage brokers can chime in. My broker friend said Florida is a very volatile area for jumbo and expects it to remain so for the indefinite future.
The last time I even followed the rates was 2 months ago since my friends in St. Augustine, FL were looking to buy a home in the 700-800K range. And they were getting quotes in the high 5% range WITH 35% down and WITH 2 points being paid. And that was for a 10 year ARM.
Jumbo loans and Florida generally do not mix too well these days. Don't expect to see any rates near 5% (like for the conventional loans).
I'll have to email my mortgage broker personal friend tomorrow on the rates. We strictly looked for 30 year loans. But the rates for 30-40% down were the same and those were all ARMs. Hopefully other mortgage brokers can chime in. My broker friend said Florida is a very volatile area for jumbo and expects it to remain so for the indefinite future.
The last time I even followed the rates was 2 months ago since my friends in St. Augustine, FL were looking to buy a home in the 700-800K range. And they were getting quotes in the high 5% range WITH 35% down and WITH 2 points being paid. And that was for a 10 year ARM.
Jumbo loans and Florida generally do not mix too well these days. Don't expect to see any rates near 5% (like for the conventional loans).
Is there any way to do a conventional for $417 and HE loan (fixed rate, term) for $83? Total LTV would still be 71%. I am looking for a 15 year first. Second could be 10 or 15 years.
We have very good credit and very little other debt (one car loan, $700/month). We do have credit cards but we pay the full balances monthly. We are not ready to buy yet but I am trying to think the financing through thoroughly.
My husband has a business relationship with a small bank if that helps.
Is there any way to do a conventional for $417 and HE loan (fixed rate, term) for $83? Total LTV would still be 71%. I am looking for a 15 year first. Second could be 10 or 15 years.
We have very good credit and very little other debt (one car loan, $700/month). We do have credit cards but we pay the full balances monthly. We are not ready to buy yet but I am trying to think the financing through thoroughly.
My husband has a business relationship with a small bank if that helps.
My sister tried to do something you are asking up in Maryland with a refinance.
The "conforming rate in her county was $560K" Conforming rates vary by region. Maryland is higher cost, thus higher than the 417K in Florida. She has a 1 million dollar home. She already paid down the loan to 700K.
What her broker offered her was 4.875% for the 560K "conforming" loan. Than he offered to have her take a 140K variable rate (not fixed) at the current 3.5% home equity. I don't think you will have many options out there for fixed home equity.
But the issue with the HELOC is locking in within the same 30-45 lock period as the first loan. She got frustrated trying to time both the loans with the same lock periods.
In the end, my sister just paid down the 700K remaining balance with another 140K cash to get the loan to 560K conforming for the 4.875%.
As I said, this jumbo loan business is a complete mess in terms of getting the best rates.
I live in one of the wealthier neighborhoods in FL. The last 3 homes that sold for more than 800K, the 2 of the new homeowners paid straight cash for the homes. The other paid down down the loan to 417K. No one is touching the jumbos right now. Because the interest rates are so much higher than the conventional. Either pay down to the conforming rate or be prepared to pay much more for the loan.
Is there any way to do a conventional for $417 and HE loan (fixed rate, term) for $83? Total LTV would still be 71%. I am looking for a 15 year first. Second could be 10 or 15 years.
We have very good credit and very little other debt (one car loan, $700/month). We do have credit cards but we pay the full balances monthly. We are not ready to buy yet but I am trying to think the financing through thoroughly.
My husband has a business relationship with a small bank if that helps.
There are very few banks that will lend on a first & a simultaneous 2nd but they are out there. I am doing one right now for a client. On a 15 year, you would be fine. The conforming loan limit in Florida is $417K, the "jumbo" conforming is $423K (for that $6K difference, go with the $417K) followed by a HELOC or loan in the 2nd position.
The one I am doing now is the current loan to value on the first is 68%, then the HELOC brings it to 80%. You should be fine.
There are very few banks that will lend on a first & a simultaneous 2nd but they are out there. I am doing one right now for a client. On a 15 year, you would be fine. The conforming loan limit in Florida is $417K, the "jumbo" conforming is $423K (for that $6K difference, go with the $417K) followed by a HELOC or loan in the 2nd position.
The one I am doing now is the current loan to value on the first is 68%, then the HELOC brings it to 80%. You should be fine.
If you have any questions, just ask.
I think the OP wanted a 83K on the home equity at a fix rate. I don't think there are many out there who will offer fix rates. They all look to be variable for the home equity.
We all know interest rates will go up. It's just a matter of when. So anyone looking to do a variable rate, better have cash in hand to pay down the home equity loans when rates do go up.
I think the OP wanted a 83K on the home equity at a fix rate. I don't think there are many out there who will offer fix rates. They all look to be variable for the home equity.
We all know interest rates will go up. It's just a matter of when. So anyone looking to do a variable rate, better have cash in hand to pay down the home equity loans when rates do go up.
The bank I was looking at would do a fixed rate on terms up to 30 years. No problem at all. Both the 1st and 2nd must be with the same bank.
I also do combo loans. Our second is amortized over 30 years and balloons in 15. This is the predominant second trust program, if you can find one. Combo financing has been very successful for non-FHA approved condominiums, where private mortgage insurance requires 10% down.
However, we won't lend in Florida. We pulled out of there almost 2 years ago. That market is considered unstable and optimal terms may not be available. (For example, a 15 year rate would most likely be the same rate as a 30 year).
If you are USAA or Pentagon Federal Credit Union eligible, you may try them, as they frequently have excellent terms. (Although, it sounds like USAA is going to be in trouble with the Finance Reform bill moving throught the House and Senate).
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