Jumbo Buyers, 4.625% is Available for You Too

May 6, 2009 10:08 pm

There are many attractive solutions for Jumbo mortgages and, thanks to the fact that second mortgages do still exist, Jumbo buyers with 20% down, can take advantage of these incredible 4.625% conforming rates.

To clarify, “Jumbo Buyers” refers to buyers who plan to finance more than $417,000, the conforming loan limit as established by Fannie Mae, Freddie Mac, and the federal government for Oregon. Therefore, many people who want to purchase a $700,000 home, with 20% down payment, have not had the luxury of obtaining these recently available sub 5% rates. In fact, Jumbo rates this past fall were generally above 7% and had a tremendous negative impact on the sale of homes above $500,000.

Last fall, a home purchase price of $700,000 with $140,000 down payment (20%), and a $560,000 loan at 7%, would have resulted in a monthly payment of $3,725 on a 30 year loan. Today, thanks to lower interest rates and new programs, borrowers have many options to choose from for the same scenario. Here are three options:

Conforming first mortgages of $417,000 at 4.625% for 30 years creates a payment of $2144, and then add a second mortgage (US Bank) of $143,000 at 7.9% on a 20 year amortization for an additional $1187. The combined payment of the first and second would be $3331, resulting in a payment $394 lower today!
Washington Federal now boasts Jumbo rates up to a loan amount of $600,000 at 5.75%. So, with our $560,000 loan amount the payment would be $3268 and result in a $457 savings.
The ING 7 year A.R.M. will provide a buyer with a 4.875% fixed rate for 7 years. This translates into a payment of $2964 for a loan amount of $560,000 and a savings over last fall’s fixed rates of $761 every month!

These significant savings allows buyers to now comfortably afford a home they passed on last fall, or it could allow them to borrow an additional $100,000 while enjoying the same payment! Combine this with the fact that prices are down close to 18% over last year; the news is tremendous for home buyers.

To determine what your best acquisition strategy is, know that each of these programs has it’s advantages for buyers who have different circumstances. For the buyer who only wants a mortgage of $417,000, the second mortgage can be paid off quickly without payoff penalty, leaving one with the incredible long term rate of 4.625 for the life of the loan. The Washington Federal program is terrific to have the security of a Fixed 30 year mortgage today. And the ING A.R.M. is a terrific loan for those who know they will live in the home for less than 7 years as well as it gives buyers the most buying leverage with the lower payment.

To learn more, call Lee Davies Real Estate today and we will introduce you to our partners Brian Page and Jeanine Roe at Northwest Mortgage Group who will determine which financing option is in best for you. While we love selling homes, our goal is to educate our clients first, so that they can determine if this is the right time to move. Please consider us part of your consulting team.