The South Florida housing market is starting to show signs of recovery.
Real estate agents are beginning once more to write purchase agreements on luxury homes, refinances are also picking up, and now, jumbo mortgages are starting to show signs of life again.
Historically, jumbo mortgages have made up about 18% of the lending market.
About 18 months ago, jumbo mortgages were virtually non-existent.
With the recent return of jumbo programs, jumbo mortgages are making a comeback and currently represent roughly 4.
55% of all mortgages originated...
and they're on the rise! When it comes to larger mortgage notes, there are two different classifications, based on loan amount: jumbo and super jumbo.
Simply put, a jumbo loan generally is any loan over the conforming loan limitation, set by Fannie Mae and Freddie Mac, of $417,000.
A super jumbo loan is any loan over and above $625,500.
As of October 1st 2011, the conforming loan limitation on a super jumbo loan dropped from $729,500 to $625,500 reflect the lower home prices across the country.
A quick lesson for the consumer seeking financing...
As compared to jumbo mortgages, super jumbo mortgages have: higher loan amounts lower (LTV) loan-to-value limitations slightly higher interest rates larger down payment requirements *Both products are offered in either a variable rate (sometimes called a hybrid mortgage) or a fixed rate mortgage.
As mortgage rates continue to stay near record lows, potential buyers now have an incentive to move into a larger luxury home while keeping their monthly mortgage payments equal to or even lower then what they were several years ago.
Alternatively, consumers who have the equity to refinance their mortgage may be able to reap the benefits of lower rates and additional cash flow.
It seems that lenders are starting to see the greater need for jumbo mortgages within the Miami real estate market.
For quite some time, it has been difficult for those in the market for a home to purchase a higher-end home in Miami, due to lack of financing options.
Only cash buyers or those with funds for massive down payments were able to purchase homes in the lovely neighborhoods of Bal Harbour, Pinecrest, Sunny Isles, and Miami Beach.
Overtime, this has resulted in an oversupply of housing.
With the return of jumbo and super jumbo programs, the oversupply is gradually shrinking.
There are still a few years ahead until there is a balance of supply and demand.
If you recall your Econ 101 class, when supply exceeds demand, it's a buyer's market! It's still a great time to make a purchase if you are interested and able to do so! Though lenders are making credit available to jumbo and super jumbo borrowers, the requirements are pretty stringent due to the increased risk inherent in larger loans.
Lenders are requiring stronger than average credit (somewhere around a 700 FICO), larger down payments (between 20% to 30% of the purchase price), as well as the usual documentation such as proof of income and assets.
It's exciting that jumbos and super jumbos are back.
Now you can go and get financing for that waterfront property that you and your family have been drooling over!