Jumbo Mortgages

Mortgage lenders boosting jumbo mortgage limits 2 months earlier than regulator – Every day Bulletin


Lenders are dangling a godsend for those in the market looking to buy or refinance a home for more than $ 548,250 now, skipping the expected November credit limit hikes.

Several aggressive mortgage lenders are issuing larger remaining loans without burdening customers with the quarter percent difference between a compliant loan and a high balance loan.

United Wholesale Mortgage, PennyMac, and Rocket / Quicken Mortgage offer the same rates as Fannie, Freddie for loan amounts up to $ 625,000. That’s a 14 percent increase, or $ 76,750 more than the current mortgage cap of $ 548,250 set by the Federal Housing Finance Agency regulators.

In its September 30 press release, United Wholesale Mortgage also said it will accept high-balance loans of up to $ 937,500, a staggering $ 115,125 increase over the current high-balance or so-called Fannie Mae jumbo -High cost limit of $ 822,375 means areas like Los Angeles County and Orange County.

It’s worth noting that home prices rose at a record pace during the pandemic year. Jeff Collins, a real estate reporter here at Southern California News Group, reported Thursday that price gains have been in double digits for two years, up 11.3% in 2020 and an estimated 20.3% this year. The average price of an existing single family home has increased by more than $ 200,000 over the same period – nearly $ 2,000 per week.

Jumbo-sized real mortgages (anything over $ 822,375 for Fan-Fred or $ 937,500 for UWM) usually come with higher interest rates.

The bigger chance is that Fannie and Freddie typically lower the down payment or equity required (in the case of a refinance) compared to most jumbo lenders.

Jumbo lenders usually require a minimum of 10.1% down payment or even 20%. However, the increased high-balance loan amount would only allow a 5 or 10% decrease for a listed property of $ 750,000 or $ 800,000, according to Matt Ishbia, CEO of UWM.

And running the loan application data through the Fannie or Freddie underwriting engines allows for much higher debt-to-income ratios (around 49%) than true jumbo underwriting rules (around 43%). Take for example capital, interest, taxes, insurance, club fees, monthly credit report bills and other bills like alimony or child support. Divide that dollar amount by your gross monthly income to find the debt to income ratio for good borrowers.

None of the other lenders offering the new $ 625,000 credit limit announced any increase in their high balance caps.

(Full Disclosure: My Mortgage Grader company is a Rocket customer and a former UWM customer.)

Fannie and Freddie almost always offer the best fixed-rate mortgages in America, as long as the loan amount you want doesn’t exceed $ 548,250. Or, for the so-called high agency credit, it cannot exceed USD 822,375.

Each year at the end of November, the FHFA announces new F&F credit limits for the coming year. The Housing and Economic Recovery Act of 2008 (HERA) has created a permanent formula for calculating the new credit limits, according to the FHFA. Once the FHFA announcement is made, most lenders will immediately accept interest freezes and finance mortgages based on the newly announced credit limits.

So what is there? Why and how do these mortgage lenders jump ahead of the mandatory calculation and the official FHFA announcement?

“It’s a marketing ploy,” says Guy Cecala, CEO and Editor of Inside Mortgage Finance. “It’s a way of getting someone who isn’t a customer yet.”

Cecala believes the FHFA number will be higher than the $ 625,000 loan amount in November. “We expect (the loan amount equals) to be higher, $ 635,000, $ 638,000,” Cecala said.

Another mortgage insider believes lenders are now sure to improve their numbers.

“The bigger lenders did the math themselves and know the law,” said Dave Stevens, Mortgage Bankers, Association President and Chief Executive Officer Emeritus.

My advice to you Don’t worry about finding a lender for your jumbo mortgage. Put on your internet detective hat and search the internet.

In the first six months of 2021, Rocket / Quicken was F & F’s largest loan seller with a market share of 10% (70% of its borrowings were direct from consumers and 30% through mortgage brokers). PennyMac was number two with 7% of the market share, and UWM was number three with 5%, according to Inside Mortgage Finance.

Most mortgage brokers have a relationship with UWM or Rocket / Quicken. Some mortgage lenders (or “correspondent lenders” in industry jargon) may sell their underwriting loans to PennyMac because, according to the IMF, 81% of its business relies on correspondents.

There may be other participants in this new oversized $ 625,000 conforming loan limit such as: B. the digital lender Sage Mortgage.

“The agencies have developed guidelines for their methodology for updating compliant credit limits,” said Brad Seibel, Sage’s director of mortgages. “This guide enables us to look ahead and save the consumer now instead of waiting.”

Freddie Mac rates news

The 30-year fixed interest rate averaged 2.99%, two basis points lower than in the previous week. The 15-year fixed rate averaged 2.23%, five basis points lower than last week.

The Mortgage Bankers Association reported a 6.9% decrease in mortgage application volume from the previous week.

Bottom Line: Assuming a borrower receives the average 30 year fixed rate on a compliant loan of $ 625,000, last year’s payment was $ 41 less than this week’s payment of $ 2,632.

What I see: Well-qualified borrowers can get the following fixed-rate mortgages without points on site: A 30-year FHA at 2.25%, a 15-year-old conventionally at 2.25%, a 30-year-old conventionally at 2.875%, a 15- Annual high balance (USD 625,000 to USD 822,375) at 2.5%, a 30-year high balance conventionally at 3.125% and a jumbo 30-year fixed at 3.375%.

Note: The 30 Year FHA Compliant Loan is capped at $ 477,250 in the Inland Empire and $ 548,250 in LA and Orange Counties.

Eyecatcher loan program of the week: A 15-year fixed rate of 1.875% with two point costs.

Jeff Lazerson is a mortgage broker. He can be reached at 949-334-2424 or jlazerson@mortgagegrader.com.