Jumbo Reverse Mortgage

Jumbo Mortgages

became more expensive and harder to come by as the nation's credit crisis deepened. That might be starting to change.

"Jumbo" refers to mortgages that are too large to be bought by Freddie Mac or Fannie Mae. The "conforming loan limit" for those government-backed entities is $417,000 in many parts of the country, but goes as high as $729,750 in high-cost areas of the continental United States.

The average 30-year fixed-rate jumbo mortgage averaged 6.5% for the week ended March 27 -- the lowest since May 2007, according to HSH Associates, a publisher of consumer loan information. On Oct. 31, the average rate on a 30-year fixed-rate jumbo mortgage was 7.9%, according to HSH data.

Jumbo appeal

Lenders' interest in making more jumbo loans isn't surprising, said Keith Gumbinger, vice president for HSH. Lenders no longer have many institutional buyers for their jumbo loans, forcing them to keep the loans they write on their books.

Banks held back when cash was tight. But banks have more money to lend these days, as consumers have taken money out of the stock market and put it into safer investments.

"More cash comes in the door," and so "the loans go out the other side." Plus, banks have gotten assistance from the federal government, and record-low conforming mortgage rates have inspired more people to refinance loans -- giving banks some more liquidity, he said.

For financial institutions, the return on a jumbo mortgage is also starting to look appealing.

Banks are "taking a look at what investment alternatives there are," said Higgins of ING Direct, and they "are saying 'we wouldn't mind a 6% to 7% asset on the books.'"

What to know?

Borrowers in the market for this kind of loan, however, shouldn't expect a simple process.

Mortgage shoppers will find differences in price and availability from lender to lender. Jumbo programs vary greatly from one side of town to the other, he added, and lenders will sometimes originate a higher volume of loans for a while, then slow down when they've hit a certain point.

If you think you're in the market for a jumbo mortgage, consider the following:

• Decide if you need a jumbo. Don't automatically assume that your mortgage will exceed the conforming loan limits, said Cameron Findlay, chief economist of LendingTree. As home prices have fallen and the U.S. has raised loan limits in some areas, more home buyers probably need conforming mortgages. Some people who are looking to refinance and who originally needed jumbo loans may also fall within increased loan limits. With a conforming mortgage, you will likely get a better rate.
• Availability may be increasing, but requirements are still stiff. Bank of America jumbo loans, for example, require at least a 720 credit score and a 20% down payment for a purchase (or 20% home equity on a refinancing). And borrowers need to have at least six months worth of reserves in the bank. ING Direct requires 25% down.
• You need to shop around. "Borrowers need to shop around for any mortgage, but particularly for jumbos," "A small local lender or credit union may have a good deal, but you won't know unless you do your homework. Ask Ascot Mortgage Services, LLC for a complimentary consultation to determine the pros and cons and best rate available in the market for your specific situation.
• Compare apples to apples. Lenders often talk about their products in terms that don't allow you to easily compare with other lenders. Make sure to draw fair comparisons that consider mortgage fees and costs.

The EQUITY PLUS ADVANTAGE

is a new jumbo product that is proprietary in its creation to the investor. It allows the borrower to take the maximum amount of money with lower closing costs - no FHA Mortgage Insurance Premium. This product will yield the senior borrower the maximum amount of cash.

The Equity Advantage Product has a 3% margin which is lower than other products available in the market. A higher margin of 3.5% may be selected in return for reduced closing costs. The rate is adjustable, compounded and reset monthly. It is based on the LIBOR index, one of the most stable indexes in the industry, with a 12% cap. Rate.

There is a minimum draw amount required at closing of $100,000 and includes closing costs, liens and any lump sum advancement. The CREDIT LINE GROWTH is 5% per annum with a minimum service fee of $30. per month.

Please contact Ascot Mortgage Services, LLC at 214-360-9505 for a complimentary consultation or schedule to schedule a call with your financial advisor to examine the financial, trust and estate planning benefits of a jumbo reverse mortgage.