Promising trends continue to support the idea of an impending housing sector recovery. Foreclosures and mortgage delinquencies have decreased, while both sales and prices have continued their encouraging climb. Special programs have recently been put in place to assist with large down payments. Now, more than ever, banks and employers are offering financial help to borrowers of jumbo mortgages so that the recovery may continue.
As their names suggest, jumbo mortgages are loans in which the amount borrowed is above conventional conforming limits. Jumbo mortgages are dictated by the amount borrowed. They are typically representative of those loans exceeding $417,000 in most parts of the country. However, jumbo mortgages in higher-cost areas may be considered any amount over $625,000.
Jumbo loans typically require a 20 percent down payment, making them difficult for many families to acquire.
To encourage homebuyers to partake in such loans, select financial institutions have quietly begun offering a variety of jumbo mortgage options. Since fall, these banks have offered jumbo mortgages for as little as 10 percent down. Minimal requirements should allow more individuals to buy the house of their dreams. However, this privilege is reserved for those who have demonstrated the ability to maintain exceptional credit.
Kinecta Federal Credit Union’s Savings Advantage program has been assisting homeowners since its conception in April. It requires an 11 percent down payment for primary- or second-home mortgages. The savings program is currently available in 30 different states. Options include five-year, seven-year or 10-year adjustable-rate mortgages that each transition to a fixed-rate.
The loan was developed specifically for those who are credit worthy, but lack appropriate liquidity to come up with a high down payment.
For those living in high-cost geographical regions, beneficial government options offer down payment assistance as well. Loans provided by the Federal Housing Administration (FHA) can reach $729,750 and only require a 3.5 percent down payment. Potential borrowers can qualify with a credit rating of 580. FHA loans eclipsing $625,000 will require the borrower to meet additional requirements.
It should be noted, however, that lower down payments would coincide with higher interest rates and higher monthly payments.
Michelle Belmonte, a senior loan officer at Campbell, Calif.-based American Financial Network Corp., says a number of her clients have benefited from assistance programs. “California is so much more expensive, and they also want to lure the best of the best, whether it’s Silicon Valley or Hollywood,” Ms. Belmonte said.