Jumbo Mortgage Loan : November 2009

Contrary to popular belief, super jumbo loans are available in California. I want to let you know what I have found to be the maximum loan amounts from the lenders that my company is approved with. As you may have guessed, the requirements for super jumbo loans have gotten stricter.

In San Mateo County, where I live, the "agency (Freddie, Fannie)" jumbo limit is $729,750. The term "super jumbo loan" is relative - for the purpose of this article I will consider it to be any loan amount more than $1 million. The following guidelines are for the purchase of primary residences. 

On super jumbo loan amounts up to $2,000,000, the maximum loan-to-value (LTV) percentage is 80%. With loan amounts up to $1,100,000, secondary financing up to 90% of the purchase price is allowed (you're probably going to have to ask the seller to carry a second mortgage to get this outcome - I don't know of any banks lending to 90% in this price range).

A loan amount between $2,000,000 and $3,000,000 has a maximum LTV of 75%. If you or your client wants to put 20% down to obtain a super jumbo loan in this range, secondary financing is allowed up to 80% of the purchase price.

Super jumbo loans are available between $3,000,000 and $5,000,000 up to 70% of the property value. Secondary financing from the seller is OK up to 80% of the property value. 

If you need more than $5,000,000, you may need to consult with a private banker, or consider a private money loan. I have found that the highest LTV a private money lender will consider is 75% in California for a very strong borrower.

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My Jumbo Loan Blog

Here are ten reasons why you may need a private money loan in San Mateo County:

• Speed - private money lenders can move fast because they can give more attention to the files submitted. They are not processing hundreds or thousands of files per day, like banks do.

• stated income - private money lenders may not require income documentation as long as the file falls within regulation Z guidelines regarding stated income.
• low credit score - private money lenders are more willing to work with clients who have credit scores that fall below what the banks require. Their primary concern is equity in the property. Secondarily, they are concerned with the client's exit strategy, meaning the plan to get the private money loan paid off when it becomes due.
• High loan amount - many banks have reduced their maximum loan amount. Private money lenders can fill the void by funding large loan amounts.
• Unlimited Cash-out - The restrictions on cash-out have been tightened by institutional lenders. Private money lenders have the ability to fund loans that do not have restrictions on the amount of cash-out.
• Vesting - Many lenders do not allow title to be held by a corporation or LLC. Private money lenders are often able to fund loans with the property vested in a corporation or LLC.
• Bridge Loan - If you want to buy a home before you sell your current home, you may need a bridge loan. Private money lenders are often the source for this type of loan.

• Rental property cash-out - This type of transaction is another type that has had its guidelines tightened by most financial institutions. Although the rates are usually higher, private money lenders can fund this type of transaction.
• Incomplete construction - Construction projects sometimes stall because the financing source runs out of money. To complete construction, a private money lender can be a source of funds to fill the gap to finish construction.

• Pay off another private money loan - Private money loans are usually written for a short term (1 to 5 years). The private money borrower may not be able to qualify for an institutional loan when their current loan becomes due. Their only choice may be another private money loan.

If you are a borrower or a mortgage broker in San Mateo County, or anywhere in California, I can help you obtain private money financing.

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What Is A Private Money Loan?

Here is the latest about the home buyer tax credit. If you are looking to buy a home in San Mateo County you should probably familiarize yourself with the requirements to qualify.

The home buyer tax credit is going to be extended to move-up buyers. What kind of impact do you think this will have on the real estate market in San Mateo County?