Jumbo Loans Are Coming Back

For the last year or so jumbo loans (those loans over approximately $440,000) have been very difficult to obtain and if you could get them were extremely expensive. Since a lot of Durango real estate tends to be over $500,000 in sales price, the inability to obtain jumbo loan financing has certainly put a hamper on those higher end sales. Due to some recent changes, that is easing up.

Right now jumbo rates are lower than at any time this entire year. For the purchase of a primary residence or a vacation home and where the buyers have excellent credit scores, today's rate... and that would be on November 9, 2010... is 5.875% with no points or loan origination fee. I obtained this quote from David Fountain with the Durango branch of Wells Fargo Home Mortgage. One of the requirements to get that jumbo loan approval is that the borrower must have additional funds left over after the down payment and closing costs as a reserve. This is called Post-Close Liquidity or PCL and it is expressed as a percentage of the loan amount. The smaller the down payment, the more PCL is required. For primary residences with loan values up to $1.5 million, borrowers must have a 10% PCL if they put a 30% down payment. With a 25% down payment, the PCL would go up to 20%. With a minimum down payment of 20%, then the PCL requirement is 40%. I think most people can understand what the lender is trying to do and that is just to make sure that the borrower has additional funds that could be available to use for payments and maintenance on a house in that price range. Over leveraged home purchases are partly what got us into the problem that we just went through this last year and a half and I think it's just good banking policy for the bank to be conservative and provide loans at a very low rate. We saw jumbo loans in the 10% or 11% range earlier this year, so 5.875% looks pretty sweet.

If the loan amount is between $1.5 million and up to $2 million, the rate is still the same if they put 30% down payment and then there would be a 10% PCL requirement. The minimum down payment in this price range would be 25% but then the PCL goes up to 30%.

For vacation homes or second homes with loans up to $1 million, the minimum down payment is 30%. For a vacation home with a loan from $1 million-$1,500,000, the minimum down payment is now 35%. If the vacation home is between $1.5 million in $2 million then the down payment is 40%. Because of the larger down payment, the PCL for vacation homes is 10%.

I have used David Fountain at Wells Fargo Home Mortgage for years and all of my clients rave about his great service. Please feel free to contact him directly. His direct line phone number is 970-385-9360 or if you'd like to e-mail him you may do so at: david.fountain@wellsfargo.com

Those of you that have read my year-to-date statistics through September of this year know that we have actually sold more homes over $1 million in price this year than we did in the first nine months of last year. The vast majority of those homes were North of Durango either in the North Animas Valley, at the Glacier Club, or at or around the ski area. The buyers and sellers of the million-dollar plus primary residences will be especially helped out by this breakthrough in jumbo loan financing.

We would love to help you find that high-end home and Team Lorenz currently is marketing two homes over $1 million in price. One is located three minutes from the ski area on Lake Purgatory and is over 4000 ft.² in size, has four bedrooms, five bathrooms, a beautiful rock fireplace and a spacious deck overlooking the lake. This Durango home is priced at $1,575,000 and the furnishings would be available for an additional fee. Click the above link for more details.

The other high-end home we are currently marketing is located 10 minutes Southwest of Durango in the Shenandoah Peaks subdivision. This is a four lot enclave, with all lots being 5+ acres in size, that is part of the Shenandoah subdivision. This is a beautiful home with tall wooden trussed ceilings and a massive rock fireplace as the centerpiece between the living room and dining room. The covered outdoor patio even has a fireplace as well. The kitchen is gourmet with slab granite countertops and all high-end stainless steel appliances. The three car garage provides plenty of room for your cars and toys. Up to two horses per lot may be maintained. Robinson and Associates, is not only the architect but the builder and they have built numerous homes in this area. You will certainly enjoy their quality. Click here for a better look at the Shenandoah home.