by Michael H. Wasserman, Attorney at Law
The Wall Street Journal reports that lenders are offering lower down-payment requirements to lure more borrowers wishing to purchase more expensive homes.
Many small lenders, (primarily community banks and credit unions), are now willing to cover jumbo loans with 5 percent to 10 percent down payments. In Chicago, jumbo loans are those that are $417,000 or higher.
These opportunities are being made possible by mortgage lenders wishing to increase market share as real estate property values are on the upswing coupled with the re-emergence of mortgage insurance companies will to insure against the risks of borrower defaults.
In December, Mortgage Guaranty Insurance Corp., a private-mortgage insurer, increased the maximum mortgage it will insure from $750,000 to $850,000. Genworth Mortgage Insurance also raised its cap to the same level from $625,500 in October. Both insurers say they will consider even larger loans on a case-by-case basis. Similarly, United Guaranty, a subsidiary of AIG, which insures mortgages of up to $850,000, says it introduced a limited program this year for loans of up to $1 million. Another insurer, Radian Group is also reportedly considering raising its $850,000 cap.
this all comes at a price to buyers - loans will likely be a bit costlier. To begin with, most insurers charge an additional 20 to 60 basis points for these loans compared with a regular-sized mortgage. Some lenders permit a one-time upfront payment to cover this fee, which for jumbo loans can total roughly 1.2% to 5.7% of the total loan amount.
While i do not lend mortgage money myself, i can (and do) help clients evaluate mortgage loan offers and opportunities, and can (and do) introduce clients to qualified/competent lenders all the time.
Questions? Concerns about your transaction? Give me a shout and let me help out.
The complete Wall Street Journal Article here.