3 Big Things: Mortgage Limits, Jumbo Rates & Refis

1. So first of all, loan limits changing. What does that mean? Well, Fannie Mae, Freddie Mac and HUD have limitations on the maximum loan amount that you lend. Fannie Mae and Freddie Mac are $548,250, where HUD is $356,000 and change. If you exceed that amount, you don’t conform. Now with FHA you can still buy a house for more, but your loan amount cannot exceed $356. Conventional, you can buy a house for more, your loan amount can’t exceed $548,250. Now, if they increase the limits, it increases buying power. We don’t know what the limits are going to be, but we got word that they’re going up. I will keep you informed.
2. So that then parlays into Jumbo loans. Any mortgage on a conventional loan that exceeds $548,250 is a Jumbo loan. Now, in the past, many people thought the Jumbo loans were inferior or more expensive to a conforming loan, not with CrossCountry Mortgage. I don’t have higher rates for my jumbo loans. There is slightly different lending guidelines and criteria. They’re a little bit more restrictive on credit scores and a little bit more restrictive on debt ratios. Other than that, my interest rates on jumbo’s are unbelievable. So if you’re buying a home in the $600,000 or $700,000 or plus call me. I’ll take great care of you.
3. Now for refinances. I made an announcement but I’m going to do it again because this is super important. I read an article, a nationally published article that 81% of people that qualify and should refinance have not refinanced yet, that’s nuts, but I’m here to help you. So if you know anybody that hasn’t refinanced yet, at least send them to me. Let’s look at it and see if refinancing is the right thing for them to do.

Now I want to put something in perspective. So this is kind of a bonus on the three big things you need to know. I was running some numbers for a client today on a $290,000 purchase and they were gonna put 20% down. So I said, “Why do you want to put 20% down if you qualify for 5%?” And they said, “Well, I don’t want to pay PMI” My comment is, “Why wouldn’t you want to pay PMI?” Many people think the PMI is bad PMI is great. Why is PMI great, because you can put less money down, leverage your money and keep your cash working for you in the bank. Now if you are just an average investor in the stock market mutual funds, you should be making 15% plus on your investments. I made well over 25%. I’ve met a few people that have made over 35%. Now that’s not consistent, you can expect about 7.5% to 15%. So now should you put 5% down on a house or should you put 20% down? I ran a scenario: Cash to close on a $290,000 house with 20% down, you needed about $64,500. Payment was about $1341. Now with 5%, you only needed $21,300, payment was $1577. The payment is $236 more, but you get to keep $43,000 in your bank account. Now, what would you do with $43,000? You put it in the bank, and you make 15% interest on it. Your interest on your investment is greater than the extra amount that you’re going to pay on your payment. Because your payment was $236 more, you’re making about $300 profit by keeping your own money in the bank. And that’s only at 15%. It’s a no brainer man. So if you want me to run those numbers, let me just show you the differences in 5% versus 20% owner occupied only. Call me The Loan Arranger, you got the number.