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Jumbo loans and buying a house - YouTube
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welcome back and i'm your host stephen
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norris and as always my co-host michael
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dye megastar financial and today we're
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talking about some jumbo loans now as
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you guys all know
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to buy a property without cash you have
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to go get a loan from either a financial
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institution a lender a broker or a bank
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whatever kind of method you'd like to go
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acquire that loan now
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you have to choose what kind of loan you
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want there are multiple kind of products
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out there
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and we have videos on all of them but
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today we're talking about the jumbo loan
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so obviously this is michael's world so
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he's talking about exactly what is the
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definition of a jumbo loan someone says
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we have to do a jumbo product or a jumbo
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program or is it jumbo loan what does
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that mean
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he's gonna go over the differences
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between a jumbo versus a conventional
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loan rate and the limits on that as well
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in terms of height to qualify for that
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loan too so without further ado michael
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take it away all right thanks a lot
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stephen well i mean you've kind of hit
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on a few things right so a jumbo loan is
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what they call a non-conforming loan and
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uh the loan limits on that are a little
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bit higher right so for conventional
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loans in 2021 our conventional loans
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went from zero or you can say one dollar
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all the way up to 548 250. and then
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anything from 548 251 to 596 850 was
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considered high balance which is still a
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conventional loan so really the jumbo
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loans in last year started it 596 851
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and then went up
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um there are definitely different
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parameters on that jumbo loan they're a
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little stricter but as we were talking
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about in our last show steven we know
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that uh conventional loan limits for
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2022
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which are available at least we have
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them available and i'm sure most lenders
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have them available right now
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i've gone all the way up to 6.47
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so we've seen quite a big jump in there
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and so now
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uh jumbo loans are going to be anyone
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anything bigger than that 647
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201 and up um so i'm speaking about the
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jumbos at least here at megastar we're
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delegated to underwrite several
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different products so i have probably
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about
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uh
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five to eight different jumbo products
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that are available for borrowers um one
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of the things that are stricter on there
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are the
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credit score that they want out of it
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there's a minimum credit score of 700 on
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most of our programs for jumbo and the
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other thing is is that um also what's
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really changed steven is the fact of the
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loan to value right so on a jumbo loan
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they want you to put a minimum of twenty
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percent down as to we're on a
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conventional loan as you know we can do
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anything on a conventional but three
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percent down um right and on fha three
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and a half so it's quite the big gap
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there but then again you're buying
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something that's a little bit more
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expensive and they want you more vested
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in that property there's also uh debt to
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income ratios that they have on their
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conventional loan we can kind of push it
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and sometimes push it quite a bit and
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get up there close to 50 percent however
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on the jumbo you're going to be stuck at
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43
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on that back so it's something that
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you're really going to need to talk to
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your lender with because each lender is
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probably going to have something a
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little bit different available to them
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and the other thing with the jumbo is is
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depending on which lender you use and
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what they have
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they'll have loan limitations on that
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for us here at megastar uh we'll we'll
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load up to three million dollars but
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that's as much as that will do on that
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so
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on that you know the jumbos definitely
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they they want a little bit more because
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it's a non-conforming loan and it's
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something that's really not sold on the
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secondary market and we were talking
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about that stephen the investor that
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does that usually holds on to that and
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becomes a part of their portfolio if you
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will and they usually service that loan
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um to the borrower uh more often than
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not so that money is definitely not
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churning over as to where like on a
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conventional loan
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we bundle those up and then sell a bunch
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of them at one time to fannie mae or
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freddie mac and then we turn around and
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usually buy the servicing rights back um
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so we end up servicing some of those
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loans so on the jumbo side uh usually
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who's going to do that's going to hold
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on to it for you depending on who it is
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and there are definitely some
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limitations so make sure
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um that you talk with your lender and
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really go over that because uh one
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they're a little bit harder to qualify
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for
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and at the same time um as we know the
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loan amounts are much higher and you
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want to make sure that uh you know your
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lender can provide that because not
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everyone has a great jumbo loan or a
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non-conforming loan that's what's called
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a lot on our side
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but that's a lot of really good talking
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points i know that some of the key
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things i want to hit on just to remind
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people about is when it comes to the
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jumbo versus the conventional number one
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you mentioned it right credit score has
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got to be a little bit higher but
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just because your credit score is not
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700 or 720 or even 800 maybe you're at
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690 or 675. that is what you're at today
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not what you're going to be when you're
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trying to buy the home because remember
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the buying process takes anywhere
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between 30 to 60 days and if potentially
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you come across a jumbo property that
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takes longer than the average 30 days
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you only have that time as well to beef
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up your score but of course make sure
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you check in with your lender because
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every single person is going to have
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different limitations on what they can
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actually do for you rather than what
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they're actually going to be able to
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qualify you at because anybody can say
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oh yeah you absolutely qualify for this
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now one of those over the phone but when
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they actually pull your credit and see
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really what is actually on your actual
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debt to income ratio sheets
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that is when the rubber meets the road
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all right you're right
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that's a really good point steve man and
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you're saying that you know brings up
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the fact that
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um usually since cobit has come around
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um on these jumbo loans they didn't have
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them for a long time right they kind of
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just stopped using them because like i
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said that money wasn't uh people weren't
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able to reuse it and sell it back um so
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they've gotten really strict
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um on that side for the self-employed
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buyer on that self-employed buyer there
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you need to make sure you check with
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your lender because the debt income um
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has changed on that usually if you're w2
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on some of my products we can go to 43
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of that debt to income but if you're
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self-employed they want you to have a 35
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debt-to-income ratio so i mean that's
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quite low
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and that there in lies like i told you a
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little bit harder to qualify for
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absolutely and i think the biggest point
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to also realize when it comes to
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actually buying your house is that the
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loan amount and the purchase price are
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going to be two different things
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completely okay
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because you're buying a house for a
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million dollars as an example that's
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obviously not what your loan is going to
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be at all right your loan could be
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the app the loan is purchase price minus
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the down payment all right now obviously
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michael mentioned that you have
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limitations on that based off of how
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much you're gonna buy which every
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singles lender's difference makes you
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ask them but
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here's the example i want you guys to
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also always remember all right if your
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rate interest rate is based off of the
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balance of the loan and jumbo is
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different than conventional because it's
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a little bit higher because it's a
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little bit riskier
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do you actually think it's worth to put
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a little more down payment as an example
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if the house is going to be nine hundred
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thousand dollars you need minimum twenty
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percent that's a hundred eighty thousand
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dollars so your balance now is seven
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hundred and twenty thousand on your loan
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in order to get your conventional loan
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rate you have to put an additional 80
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and some change down to get to your 647
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all right now that 80 000
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if you put it down
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now you're in the conventional loan
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interest rate how much a month is that
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going to lower your actual payment okay
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you have to think about that math at the
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same time think about is this dollar
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amount going to compound year over year
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then i'm gonna be able to make that
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money back once i put it down is
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remember over the time you guys can put
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more down the principle you guys can
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refinance you guys can do whatever you
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want but always just ask yourself the
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question upfront and make sure your
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lender understands what you're trying to
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do okay and make sure that whoever you
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work with as a realtor understands
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what's trying to do too because as an
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example if you do buy a house for 800
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000 20 down that means your loan 640.
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that's a conventional loan now okay now
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you're interested in different ballpark
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in the jungle all right so see how that
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map changes right there make sure that
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whoever your team is the realtor the
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lender
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they're on your side and they understand
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down to the letter exactly what your
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goal is trying to do because
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if you guys are trying to buy a property
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for 900 000 and that's just not in your
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wheelhouse because you guys want the
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lower rates don't just say they can't
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afford that potentially the house is not
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worth 900 000
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and you guys get it for 800 000 right
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now obviously check with your realtor to
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make sure that the um houses in the area
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can actually appraise for that amount
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too which is a different conversation
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but the point we're trying to make here
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is that when it comes to loans the
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actual conventional versus the jumbo
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limitation is a conversation you would
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have to have with the realtor the
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learners they understand what we're
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trying to do because if you don't if you
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don't explain yourself to your guys
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unfortunately we're not mind readers and
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so we want to be very clear and upfront
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about that and quite honestly if you
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don't feel like comfort level or that
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good gut check with whoever you're
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working with go find somebody else to
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work with
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i'm being very honest there guys you
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know there's a lot of different folks
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out there who actually have good
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interest and actually have a good heart
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that you can actually work with our
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rights go find a good team and work with
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those folks all right
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it's a great point stephen definitely
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your lender should be doing side by side
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comparisons for you so they should be
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educating you through that process and
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showing you and giving you other
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um thoughts on what to put down how to
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structure that low
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that's where they're the experts at
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not you that's why you go to a lender so
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you want to make sure that they're
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actually giving you good comparisons
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because everybody's money situation is
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different stephen we know that so it's
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our job to make sure that we lay out
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options for that for that borrower to
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make sure that they have a clear
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understanding because how someone spends
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their money it's probably a lot
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different than how you save and spend
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your money so you've got to find the
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best loan program that works for you
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not for your lender they have to work
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for you that's really what it's about
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and that's why we give you options
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absolutely and guys know if your
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realtors and lenders aren't going to be
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transparent about that kind of stuff too
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i think you have your answer then but
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you know all being said guys thank you
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very much for writing into this question
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because remember we make these videos
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based on the questions you guys asked us
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that you want us to answer okay so with
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that all said see you guys next time
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have a great one
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