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Jumbo Loans With 3.5 Down | Loan Options Available To You - YouTube
Channel: Matt The Mortgage Guy
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All right, all right, all right.
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Matt the Mortgage Guy.
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In today's video,
I'm going to talk to you
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all about jumbo loans.
As promised in 2022,
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as market share starts
to decrease for refinance
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and for purchase,
both lenders are going to start
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coming out with new products.
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In today's video,
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I'm going to talk to you about
a multitude of jumbo products.
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10% down 5% down
even 3.5%
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down jumbo products,
which I'll get to at the end.
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Before I jump into it,
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if you would like
comment, subscribe, share
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this with somebody who you feel
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might benefit from it.
As a mortgage broker
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who's in it all day, every day,
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talking to consumers,
real estate agents
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and other mortgage pros.
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I feel like I've seen
a thing or two, so
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I know a thing or two. Anyhow,
I want to jump right into it.
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As I said, jumbo products
made a big comeback last year.
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Tons of different lenders
were coming out with 10% down.
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As a broker, I've
got access to all of them
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as of today, February 2022.
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We've got even new and improved
5% down options and
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3.5% down options.
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Before I present those,
I want to talk to you
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about some of the guidelines
on these other programs.
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I've got lenders who underwrite
this stuff direct to Fannie
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Freddie, just meaning there's
not extra overlays in place.
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There's not always
two appraisals needed.
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There's not a ton
of reserves needed.
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There's not, you know, extra
things that you need to provide
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which was always a turnoff
for jumbo loans.
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When you talk to a mortgage loan
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originator who knew what
they were doing,
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they would tell you if you could
avoid it any way possible.
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You want to get a conventional
loan versus a jumbo loan.
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This kind of solves
that where a lot of lenders
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would come out and say, Listen,
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if it gets a DU approval,
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meaning the automated system
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that would approve it
for a conventional loan
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says, yes, we'll approve it
as a jumbo loan.
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We're not going to ask
for extra months of reserves,
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extra months of bank
statements, extra
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income documentation
or whatever it would be,
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you know, a really fine
tooth comb underwriting process
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for jumbo loans,
which was kind of
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what was expected in the past
and probably what you'll get
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with the big banks. So
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these jumbo products, I'll
start with just the vanilla
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30 year fixed 20% down
that you've always seen.
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A lot of lenders I work with
will go up to 3 million.
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They'll allow you to have a debt
to income ratio up to 45%
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as long as you've
got a 680 FICO or better.
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Sure, I've got lenders
that can go lower,
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but this is kind of like par
for the course 680 plus FICO
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on these ones where you're going
to put 10 or 20% down.
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Also have jumbo arms
adjustable rate mortgages.
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These are surprisingly popular
when I talk to somebody
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who's buying a home
or refinancing a jumbo loan,
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and they know that
they're going to be relocated.
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They know they're going to move
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and they tell me, Matt, there's
no way I'm in this thing
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for more than five years.
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I'll present those options
because those things make sense
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to take a lower interest rate,
to have the rate
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only fixed for five years,
seven years or ten years.
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Those are the three
different options that I have
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on these jumbo arms.
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This is five, seven
or ten for how long
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it's fixed, and after that
it becomes adjustable.
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Same here where at 680 FICO.
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45% debt to income
ratio can be a primary
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second home or investment
property for these. And if you
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if you go up to 3
million on these,
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you're only going
to need one appraisal.
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If it's a refinance above
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2 million, you're going
to need two appraisals. So
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another jumbo product
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that's out there
is jumbo interest only, right?
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So for ten years, you're
only going to pay interest.
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And then after that ten year
period, it's going to be a 20
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year amortization,
paying principal and interest.
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This is an option
for some people that
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just want to keep cash flow.
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Imagine on a jumbo
loan as well, like we're not
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talking a small amount.
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If you're born 1,000,000,
1,500,000
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and you're not paying anything
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towards principal,
just paying interest,
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it might be $1,000
a month, $1,200
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a month, $1,500
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a month cheaper to make this
interest only payment.
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Now, buyer beware.
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This only makes sense to
somebody who's got good plans
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for what they're going to do
with that extra cash flow.
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And keep in mind,
you're going to have to qualify
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for the fully amortized payment.
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You're just not going to be
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making any payment towards
principal. Right.
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So I know a lot of
really seasoned investors
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that want more control over
their money are going to say,
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give me that interest
only payment or make that
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towards my mortgage.
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Because rather than pay down
this 4% mortgage,
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I'm going to go out
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and take this money and use it
10, 12, 15%.
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Investments might make money
over here, and if I decide
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to throw some of this money
at my mortgage, great.
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But I don't want to pay down 4%
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at the expense of not
being able
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invest in something that
might return me 20%, right?
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So those Io products
interest only loan
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amounts up to 3 million.
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Again, 700 plus FICO
so a little bit more strict
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on the FICO requirements
43% debt to income, little bit
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stricter on the debt to income
requirements and, like I said,
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ten year interest,
only a 20 year amortization.
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OK, now let's talk about the 5%
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3.5% down
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because I know
that these products
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were few and far between,
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but I still had enough people
reaching out to me
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in the last couple of years that
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I know there's demand for this,
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and I know there's people that
are looking for these products
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It's going to take
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720 plus credit score.
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It's going to take 40% debt
to income or lower.
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So higher on credit score,
lower on debt to income.
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They want to make sure
that people aren't
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overextending themselves.
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It can be a primary purchase
or rate and term refinance
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up to $1,000,000. You
only need one appraisal.
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If you go between 1,000,000
and 1.5.
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There's going to be
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two appraisals needed, and this
program caps at 1.5 million.
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But you can buy up to 1.5
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million, 3.5%
or 5% down.
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No mortgage insurance.
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And the thing that I like
about these, I remember
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searching far and wide
for 5% down jumbo, and I can
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tell you that the terms
were absolutely horrendous.
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Some of them had
mortgage insurance,
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the ones that didn't
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had a rate that was just
astronomical, right?
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And I'll give you
February 2022 rates.
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You're going to be
in the high fours
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on these 3.5 and
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5% down products.
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But there's no mortgage
insurance, right?
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So you have to factor that in
that there's
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no mortgage insurance.
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If you want to pay
a couple of points,
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you can get these things down
into the low fours.
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And you know, for some people
who don't want to deploy
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a ton of capital
into their primary residence,
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they want to put the
3.5 or the 5% down.
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Maybe this makes sense, right?
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It's not for everybody,
and I don't think that
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I would pitch it as such.
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But for some people
who want to buy,
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you know, 1.2 million
down payment plus
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closing costs only
be out of pocket 60, 70, 80,000
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And maybe that frees up the
150 or 200 that they thought
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they'd have to put down
on this larger purchase.
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You know, because a lot of
people are assuming 20% down,
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they're going to be a quarter
million into this thing
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to buy at 1.2 million.
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If you put much less down,
you can use that other money
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to deploy in a business
in other investment properties.
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What have you? Right.
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So remember, it's
not for everybody.
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Great credit score, low debt
to income ratio,
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reserve requirements.
We're going to need,
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you know, many months of
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reserves. They want
you to be stable.
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They want you to be
in a good position.
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So all these jumbo products,
they have some similarities.
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And I want to talk about those
because talking to these jumbo
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buyers, I've noticed
some similarities.
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Restricted stock unit income is
accepted on all these products.
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If you work for Apple or Google
or any of these tech companies
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that are giving you restricted
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stock units, it's
showing up in your W-2.
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Not all jumbo programs
are going to allow this.
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All these jumbo programs
I've talked about
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will allow that RSU income.
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These loan amounts are anything
a dollar or more above
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the county loan limit
in a lot of counties,
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647,200 is the loan limit
in other high balance counties
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that might be higher,
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but as long as you're above that
county limit, you can do this.
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No mortgage insurance.
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And as long as you get
an approved eligible
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through desktop underwriter,
you're good to go.
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Any questions at all?
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Please feel free
to reach out to me.
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Me and my team are more
than happy to help
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go to greatmortgagebroker.com.
Fill out a form.
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Let us know where you're at.
How we can help.
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We'd love to get you
started. And until next time,
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we gone see.
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