According to recently published information concerning the real estate market in Central Oregon, prices are rising. The median house price increased about thirteen percent over the previous year and the trend is likely to continue. Why is this important? These price appreciation situations impact the type of mortgage you can get and more than half of the time, it means jumbo mortgages. So what is a jumbo mortgage and how is it different that a so-called traditional mortgage? (To clarify, the term median refers to the middle cost of ten homes, half of which fell below a certain mark and half were above. It is probably better to think of it this way: Half of the homes sold in Central Oregon cost less than $195 per square foot, half cost more.)
What are the differences in mortgages?
What you often refer to as a traditional mortgage is more aptly named a “conforming” loan. Fannie Mae and Freddie Mac are agencies that purchase mortgages, package them, and resell them. This process keeps the flow of money moving from lender to borrower while at the same time offering guarantees to the investors who buy these mortgages.
Traditional, conforming, or even more frequently referred to, conventional mortgages all require some basic elements to move the process along. You as a borrower must have an acceptable credit score and history (the better this information is, the better the interest rates you receive), the debt-to-income ratio or DTI (basically how much you owe compared to how much you make), the loan-to-value (what you intend to borrow based on the sale price of the house) and of course, how much is the loan amount.
None of these figures are written in concrete though. While the optimal credit score will get you a great rate, a weaker credit score isn’t necessarily a deal breaker. The DTI can be adjusted by either paying down some of the debt or even closing some credit cards with high credit limits (giving the perception of debt that hasn’t actually been used). The loan-to value can also be manipulated with a greater down payment or a lower sale price. The lower the amount borrowed, the better the terms of the loan.
But jumbo mortgages – in Central Oregon, it is homes costing over $417,000 – take a different course.
How is a jumbo mortgage different?
Many of the same requirements asked for in a conforming mortgage must be met for a jumbo loan. Of course your income will be carefully scrutinized. More than just showing a couple of years of tax statements, the borrower must show enough liquidity to have six months of assets to cover any disruption in income. While these can come from a variety of sources, those assets must be seasoned (in place for at least two months). Your credit score will also have to top tier with a DTI of forty-three percent or lower (lenders have different rules). And while the industry standard for jumbo mortgage down payments was a standard 30%, some lenders have relaxed that requirement.
How may we assist you?
On behalf of The Jones Group @ Sunriver Realty
Nola Horton-Jones, Principal Broker/Realtor | ABR, C-RIS, e-PRO, GREEN, RSPS, CCIM Candidate
Bryce Jones, Broker/Realtor | ABR, CRS, e-PRO, GREEN, GRI, RSPS, SFR
Karen Marcy, Broker/Realtor
The Jones Group @ Sunriver Realty | 57057 Beaver Drive | Sunriver, OR 97707
Mobile: 541-420-3725 | Mobile: 541-420-4018 | Mobile: 503-327-9611 | Fax: 541-593-5123
Licensed in Oregon