And while big banks such as Wells Fargo, JPMorgan Chase, and more have influenced the jumbo market for the past few years, independent mortgage bankers are gaining significant traction in the jumbo space by offering equal or lower rates while providing superior customer service and greater flexibility.
What are Jumbo Loans?
Also known as a non-conforming loan, jumbo loans exceed the maximum Fannie Mae high-balance loan limit for the county the subject property is located in. While this figure is dependent on where you live, the 2021 Fannie Mae loan limit in most high-cost areas is $822,375.
Unlike conventional mortgages, jumbo loans traditionally require greater down payments. Many of the big banks are requiring a 20-25% down payment when it comes to buying a home. Independent mortgage bankers such as NJ Lenders are offering competitive rates at 20% down with the possibility for only 10% to be required of qualifying homebuyers. If you can secure one, jumbo loans offer a fair amount of flexibility and allow you to purchase a higher-quality property.
So What’s Changed?
Historically, money center banks have been looking to establish long-term relationships that allow them to manage some or all of the borrower’s assets. However, an increase in liquidity in the secondary market has allowed mortgage bankers to offer competitive rates while not requiring an ongoing banking relationship.
Any larger banks that are still offering competitive jumbo mortgages have become exceptionally selective when deciding who qualifies for them. Big banks are looking for deep-pocketed clients that are able and willing to transfer significant assets to them. Combined with a reduction in product offerings and larger payment requirements, money center banks have no longer become the best option for homebuyers in the jumbo market.
Superior Service and Flexibility Offered by NJ Lenders
Independent mortgage companies such as NJ Lenders have made the jumbo products more competitive by offering superior customer service and greater flexibility in their jumbo offerings.
Some big banks have reduced their loan to value (LTV) limits to 75%. A loan to value references the amount a person is burrowing in relation to the value of their home. NJ Lenders is offering Jumbo loans with up to an 80% LTV, up to $3,000,000.
Many of the larger banks have also eliminated the option for cash-out refinances.
NJ Lenders allows homebuyers to opt for cash-out refinances at rates of up to 75% of their home’s current market value. Cash-out refinances can be used for home improvements, renovations and other investments.
In addition, independent mortgage companies such as NJ Lenders have the ability to offer greater flexibility in their credit requirements and they do not require as much in reserves, which is a savings balance that assures lenders that you can afford to continue making payments on your loan.
If you’re considering taking out a jumbo loan, it may be time to look beyond the big banks. NJ Lenders is offering additional flexibility, cash-out refinances, reduced reserve amounts and more in the interest of expanding their capabilities and building longer term relationships with their clients.