What Is a Jumbo Mortgage and When Do You Need One?

(TNS)—Home prices have shot up in some areas of the U.S., to the point where buyers need jumbo loans to finance them. In mortgage-speak, jumbo refers to loans that exceed the limits set by the government-sponsored enterprises (GSEs) that buy most home loans and package them for investors.

Jumbo mortgages, or jumbo loans, are those that exceed the dollar amount loan-servicing limits put in place by GSEs Freddie Mac and Fannie Mae. This makes them non-conforming loans.

As of 2018, these limits are $453,100 in all states except for Alaska, Guam, Hawaii and the U.S. Virgin Islands, where the limit is $679,650. The conforming limit is higher in counties with higher home prices, so be sure to check your area’s loan limits.

The maximum loan amount varies by lender. Borrowers can get fixed- or adjustable-rate jumbo mortgages with various term options. The mortgages can be used for primary homes, as well as for investment properties and vacation homes.

How to Qualify for a Jumbo Mortgage
Jumbo lenders usually have stricter underwriting guidelines. The main reason for this is that they’re not backed by Fannie or Freddie, so they’re riskier loans. On the flip side, lenders have more to gain since the dollar value is higher and they can offer additional services to these wealthier customers.

The three common hurdles borrowers must clear to get jumbo loan approval are larger income, higher credit scores and greater reserves, says Robert Cohan, president of Carlyle Financial in San Francisco.

“To consider a jumbo loan the FICO scores have to be higher. The average is around 740, although I have seen some as low as 660,” Cohan says.

Borrowers whose scores fall beneath the normal requirements usually have to offset it with a low debt-to-income ratio.

“If you’re high-leveraged and you have a low credit score, it’s going to be hard to get a jumbo loan,” Cohan says.

Borrowers should be prepared to show enough reserves, or assets, to cover between six and 12 months’ worth of mortgage payments. The down payment on jumbo loans is, on average, between 10 and 20 percent.

“Anything lower than a 10 percent down payment and you’re probably going to pay for it in higher rates,” Cohan says.

What Are the Benefits of a Jumbo Mortgage?
The main benefit for borrowers is that a jumbo mortgage allows them to go outside of Fannie and Freddie limitations. You can still get a competitive interest rate and finance the home of your choice without being restricted by the dollar limit on conforming mortgages.

The rates on jumbo mortgages fluctuate and may be higher or lower than the conforming mortgage rate. Recently, a 30-year jumbo rate was 4.62 percent, eight basis points lower than a conventional 30-year fixed rate of 4.71 percent.

Jumbo loans are a convenient way to finance property. Instead of getting two conforming loans to finance a home, the jumbo option eliminates that need. Some borrowers prefer to finance more of the home’s cost rather than tying up cash, making the jumbo mortgages a helpful financial tool.

©2018 Bankrate.com
Distributed by Tribune Content Agency, LLC

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Partnering IRA Funds: An Alternative Way to Fund Your Real Estate Investment

Did you know you can partner with other funding sources to increase your investment potential? Self-directed IRAs are the only retirement arrangements that allow individual investors the freedom to pursue alternative investments, such as real estate. Investing in real estate with a self-directed IRA offers many benefits to those who are looking for creative ways to save for the future. Investors have complete control over their investment choices. Unlike other IRAs, you’re not limited to stock, bonds or mutual funds. Self-directed IRAs provide the opportunity to save money for the future on a tax-deferred or tax-free basis. In addition, an IRA is considered a separate entity that can conduct business with others. This is a common strategy used in real estate investments. The process is fairly simple, but be sure to adhere to IRA regulations to avoid engaging in any prohibited transactions.

How do I partner with others to purchase real estate using a self-directed IRA?

  1. Identify the partner you would like to invest with.
  2. Perform your due diligence and confirm that the investment fits your strategy.
  3. Combine your self-directed IRA fund with other funds to purchase the property.
  4. Your IRA will own a percentage of the property and must be stated on the title when the transaction is recorded.
  5. All income and expenses (on a proportionate basis) from the property flow in and out of your IRA and not your personal finances.
  6. If the property is sold, your IRA receives the portion of the proceeds proportionate to the percentage of ownership.

A self-directed IRA can partner with anyone at the time of initial purchase, but after the transaction is complete, the IRA cannot conduct any business with a disqualified person. Doing this could lead to significant tax penalties.

The following people are considered disqualified persons:

  • You
  • Your spouse
  • Your lineal ascendants and descendants, and their spouses
  • Any person providing plan-related services (custodians, advisors, fiduciaries, administrators)
  • Any entity (business, corporation, partnership) of which you own at least 50 percent, whether directly or indirectly

What are the ways in which I can take advantage of the partnering strategy to help me save for retirement?

  1. Partner With Another Investor
    Investors are on the lookout for new opportunities, and networking with like-minded individuals can be a great way to find an investment partner. Partnering with a fellow investor offers the potential to learn from each other, as well as disperse risk between two people.
  1. Partner With a Relative
    While you are not allowed to buy from/sell to relatives, as they are considered disqualified persons for these purposes, you do have the option of partnering with them to purchase a new investment. This can be a great way to save for retirement together with a loved one.
  1. Partner With Yourself
    It is possible to partner your self-directed IRA funds with your personal savings for the purchase of a new asset, such as a real estate property.
  1. Partner With Another Self-Directed IRA
    Partner your account funds with the funds in another IRA to maximize your purchasing power. Find another motivated retirement investor to explore your possibilities.
  1. Partner With a Group
    Sometimes partnering with one account, one investor or only yourself will not provide enough funding for the investment you are interested in. In this case, you can partner with a group! Partnering can be a great tool for retirement investing, but it is important that you understand how to utilize this strategy for success.

It’s Easy to Get Started
All you have to do to get started is open an account and fund it. There are three ways to fund your self-directed IRA: transfer or rollover an existing retirement account, such as an employer’s 401(k), into a self-directed IRA; or make regular, annual contributions to your account. Once your account has cash in it, you can start investing immediately! As you read in this article, you can partner with other investors until you have enough cash to invest in real estate on your own. Download our free report about partnering your self-directed IRA with real estate here to learn more.

Disclaimer: Before you invest in this business sector using your IRA, it is best to consult with your investment, legal and tax advisor. Entrust does not endorse or recommend any of these investments. Proper due diligence by you, the IRA holder, is recommended before entering into any transaction.

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Furniture And Home Decor Deals To Shop This Amazon Prime Day

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Is Amazon Embarking on Home Insurance?

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July 16 is Prime Day, and this year’s deals feature double discounts on Alexa-enabled smart home devices, including Echo, Fire TV and Fire tablets, Amazon reports. As the marketplace giant gets more and more involved in the lives of homeowners, could consumers start to see offshoots into other home-related services?

Amazon-run home insurance could be the company’s next endeavor, according to The Information, a technology website. Although Amazon has not yet provided concrete evidence for insurance plans, it would make sense due to the company’s most recent partnerships. From plans to create a line of robots to be used as homeowners’ personal assistants, to the latest collaboration with Lennar showrooms to promote its line of smart home products, Amazon is already deeply entrenched in the lives of homeowners.

The alleged reason for this possible next phase in Amazon’s services? The company’s various tech products could help monitor for dangers such as burglaries and fires, resulting in more affordable premiums, reports The Information. Amazon has already made moves into the healthcare industry to build out its medical supply business, so an insurance division isn’t outside the realm of possibility.

If Amazon did form its own insurance division, what would it look like? In order to beat out the competition, there may have to be a sizable price difference in premiums and an added catch for consumer convenience. A traditional financial model may not be feasible for a company that needs to juggle its Prime audience base, along with several other technological innovations, to stay relevant.

However, this could be more of a partnership than a foray into its own segment of home insurance. Since regulations vary by state, it would be difficult for Amazon to establish a national presence under its own umbrella without investing an abundance of time and money to maintain a legally intricate service. Another concern? Amazon would need to have the necessary funds available to create a pool of reserves for any upfront claims payments.

In order to cut costs, Amazon may be able to sell consumer information it gathers from its smart home devices—in December alone, the installed base of Amazon Echo devices in the U.S. amounted to 31 million units, according to Statista. This way, the company would be able to barter data in order to profit from already-established insurance institutions and further negotiate consumer discounts, similar to the way insurance companies currently provide credits to homeowners who have security systems installed at their properties.

According to Statista, the global smart home market will reach an estimated value of over $53 billion in the U.S. by 2022. Will future homes be run by Amazon? It’s starting to look that way.

Liz Dominguez is RISMedia’s associate content editor. Email her your real estate news ideas at ldominguez@rismedia.com. For the latest real estate news and trends, bookmark RISMedia.com.

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Millennial Buyers Face a Tough Housing Market

(TNS)—Yvonne Jimenez Smith and her husband, Brandon Smith, spoke in whispers recently as they visited a white stucco house they planned to buy on a leafy street in San Jose, Calif.

After six months of aggressive hunting, they were on their way to a small suburban home of their own after spending most of their 20s in noisy city centers.

“It was so quiet, it just seemed weird to speak out loud,” Jimenez Smith says. “We lived over a freeway entrance in San Francisco. It was always loud and we were always surrounded by people. It’s a big change.”

Like the couple from San Francisco, who are 28 and 30, other millennials are starting to follow in the footsteps of earlier generations and buy suburban houses after fueling a boom in city apartments. The share of 25- to 35-year-olds who own homes, which had been falling since 2005 as renting grew in popularity, rose slightly in 2017, according to a Stateline analysis of Census microdata from IPUMS-Current Population Survey.

Last year 32.3 percent of young people were homeowners, a slight increase from 2016 when it was 32.2 percent. That’s still well below the 45 percent in 2005 and the peak of 55 percent in 1980.

Millennials are hitting the market at a difficult time, though, with rising prices and few houses to buy as the housing industry has shifted to building more downtown rentals. Some people seeking to buy houses have been discouraged and have postponed the step, just as many have had to put off moving out of parents’ houses, forming couples and having children as they tried to build careers delayed by the recession.

Between 2011 and 2017, home prices grew 48 percent, while income for all age groups rose only 15 percent, according to National Association of REALTORS® (NAR) statistics.

“It just feels irresponsible right now,” says Jayme Fraser, a 28-year-old freelance journalist who considered buying a house in Missoula, Mont., three years ago but found prices too high. She and her husband, who is in graduate school, are now looking for a more rural home in Montana they can afford to buy while paying off student debt.

Student debt is a big obstacle to buying a home for many millennials, says Jessica Lautz, director of Demographics at NAR. The median student debt for millennials is $41,000, and they typically put off buying their first home for seven years after they wanted to buy, Lautz says.

Young people with college debt typically spend close to half of their income on loan payments, according to a 2017 study in The Journal of Consumer Affairs. This makes it almost impossible to qualify for a home mortgage with a small down payment.

“Contrary to popular opinion, millennials are not buying avocado toast instead of saving for a down payment; they’re paying their student debt,” Lautz says. “Somebody with $41,000 in student debt is going to be buying something far away with a long commute, or in a bad school district, or something too small. They’re not going to be able to stay there for long.”

Thirty-two is the median age for first-time homebuyers, according to a survey by NAR. That means many first-time buyers are squarely in the millennial generation, the oldest of whom reached their mid-30s in 2017.

The apparent increase in ownership in 2017, the first since 2005, was so tiny that it’s hard to say if the trend toward less buying and more renting is really over, says Chris Porter, chief demographer for California-based John Burns Real Estate Consulting.

Ownership is still “considerably lower than 10 years ago,” Porter says. “We may need another year or two of data to understand whether this is truly a reversal.”

Some young people who could buy houses are still on the sidelines, like Connor Coyle and his fiancée, Amy Branchini, both in their late 20s. Coyle, who works in wealth management, moved a few years ago from Manhattan to suburban Westchester County, N.Y., where he rents an apartment.

“Both of us were at the point where we wanted to get out of the city and live a more relaxed lifestyle,” Coyle says. The couple is ready to stop renting and own a house, but they just haven’t seen a house they love in their $500,000 price range.

“If we end up renting for another three years, that’s OK,” Coyle says. “What you’re getting for your money right now, to my mind, is subpar. Maybe in a few more years we can get something in the $600,000 to $700,000 range, and it will make more sense—we won’t have to put in $100,000 in renovations.”

In some expensive states, such as Hawaii, California and New York, and the District of Columbia, fewer than one in five millennials is a homeowner, according to the Stateline analysis. But in Iowa, the Dakotas and Minnesota, it’s close to half.

Today’s first-time buyers are increasingly living in ad hoc situations while they save, Lautz says, citing a survey from NAR. Twenty-one percent lived with parents, relatives or friends before buying in 2017, up from 12 percent in 1993.

Stateline’s analysis showed that the share of 25- to 35-year-olds in ad hoc situations, neither renting nor owning, has grown steadily from 21.2 percent in 2012 to 24.2 percent in 2017. Most in those situations are living with parents or other relatives.

A shortage of housing for sale is also driving prices up in some booming areas such as the San Francisco metropolitan area, where Jimenez Smith and her husband work and live. The area has added 189,000 jobs in the past three years, but only 14,000 housing units—the largest discrepancy in the nation, says Lawrence Yun, economist for NAR.

Other areas facing similar crunches are Boston, Washington, Orlando, Fla., Phoenix and Chicago, he says.

Even so, 25- to 34-year-olds are likely to insist they want to own a home in the future, according to the NAR survey.

The San Francisco couple felt the pressure to buy because their rent was rising and they were afraid that the price of a house would soon outstrip their income, even though they already could afford a $4,000 monthly mortgage and had saved about $150,000 for a down payment. Smith is a video graphics programmer for Apple, and Jimenez Smith is a policy aide for the Santa Clara County Board of Supervisors.

But in six months of shopping, they lost bidding wars again and again. Once they bid $350,000 for an empty lot with the facade and rubble of a burned-down home, figuring they could build a new home there for another $250,000. But someone else offered $480,000 for the same lot and is now trying to sell it for even more.

The couple feels lucky to have bought a modest two-bedroom house with 1,000 square feet of living space from a seller who turned out to be an acquaintance and helped them by accepting an offer matching the highest bid, not exceeding it.

“We were going through disclosures and praying it would appraise right,” Jimenez Smith says. “Fortunately, it did appraise right at $795,000.”

There were other scares. The couple had been counting on a new transit stop in the neighborhood that would have allowed Smith to commute to San Francisco, a doable but grinding hour and 40 minutes each way. The new stop was delayed, but Smith got his new job at Apple, about a half-hour away in Cupertino.

“Sometimes we worry that this is the top, that prices will go down, but our bigger worry was what if it goes up?” Jimenez Smith says. “If it went up to $900,000, we’d never be able to buy a house.”

©2018 Stateline.org
Distributed by Tribune Content Agency, LLC

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How to Make a New House Your Own

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By Julea Joseph, guest contributor

The keys are in your buyer’s hands! They’ve gone through the process … the search, deciding, inspection, stress, closing, and finally, the elation of buying a new home. Now, they have to make it their own. Here’s how.

Color – Paint is the least expensive, easiest way to update a space. It can individualize a room and put your personal stamp on your home. Pick your color style: From modern farmhouse neutrals to Boho bold colors. Whatever is in your style files (Pinterest, HOUZZ, tear-sheets), color can showcase it. And color doesn’t have to be just on the walls. If you want to keep the wall color simple, infuse color with your furniture, art, or accessory choices. Get your craft on by painting a piece of furniture, or recover your dining chairs seats with new fabric. Try trending wallpaper on a single accent wall or powder room. Create a signature look with a statement making front door color. With color, the change is quick, easy and all you.

Photo credit: Benjamin Moore

Your Favorite Things – A home should hold your beautiful art, furniture, passed down family treasures, and loved flowers in your garden beds. Simple daily rituals with favorite things, cozy slippers slipped on at the end of day, or tossing your keys into that old bowl, will infuse you into the home. It could be something new that defines your new chapter of home. That perfect comfy sofa you spied, a fresh new style that you’ve wanted to try out, fun new pillows to add a splash to a patio set. By incorporating these favorite things, you’ll become instantly grounded in your new space.

Photo credit: Julea Joseph, Reinventing Space

Make Your Bed! – A bed is your personal haven and cocoon. Dressing your bed makes your home environment feel luxurious. Even if the bedroom still has boxes, you can sleep well with a beautifully made bed. I like to mix old with new. New, fresh, very fancy (the best you can afford) sheets, a stylish linen duvet set slipped over your old favorite down comforter and pillows. Pair the bedding with Grandma’s quilt or your favorite throw at the end of the bed and you’ll be ready for a great night’s sleep.

Photo credit: Julea Joseph, Reinventing Space

Room to Room – This is where you channel Frances Mayer, the character from “Under the Tuscan Sun” – by going room to room to make it yours. Don’t try to tackle the entire home’s decorating and styling needs, instead, try to work on the spaces you spend the most time in first.

Photo credit: Julea Joseph, Reinventing Space

Five Senses – Nothing says home more than seeing, smelling, hearing, tasting, and feeling your favorites things of home. Put out those family photos, beloved books, play music, light some candles in your favor scent, open your favorite wine, and curl up on that fluffy sofa and celebrate home.

Photo credit: Julea Joseph, Reinventing Space

This post originally appeared at Reinventing Space. Reprinted with permissions. Copyright 2018.

ABOUT THE AUTHOR: Julea Joseph is the owner and lead designer at Reinventing Space in Chicago. Visit her website and blog at Julea.com.

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Tiny Bird Found In Cockpit Forces Delta Flight To Make A U-Turn

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The unwelcome passenger was later trapped and set free. Continue Reading →

3 Tips for Property Owners Handling Graffiti

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First, you must determine if the street art was legally created before renovating or demolishing the building.

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Freddie: Young, Aspiring Homeowners Stuck Until 2025

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The rising cost of housing is the biggest hurdle for young adults to overcome, and they may be sidelined for several more years to come.

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Voice Activated: Do You Talk to Your Tech?

How many of us are talking to our tech on a regular basis?

Ken Olmstead at the Pew Research Center recently highlighted the fact that nearly half of U.S. adults (46 percent) say they use voice-controlled assistants and applications to interact with smartphones and other devices.

Just over half (55 percent) say “a major reason” they use voice assistants is to permit hands-free interaction with devices.

The Pew study affirmed that voice assistant technology is being widely used to remotely control connected systems, including “smart home” lighting and heating devices. In fact, more than a quarter (26 percent) surveyed use voice assistants to connect remotely to those apps and devices.

So where are the newest voice control technologies being integrated in 2018?

Kohler, the global designer of kitchen and bath products, has introduced Konnect. This new platform allows consumers to conveniently personalize their experience with a growing number of the company’s products through voice control.

Claiming to have delivered the first voice-activated product line for the kitchen and bath, Konnect offers support through Amazon Alexa, Google Assistant and Apple HomeKit.

Say the word and adjust the company’s lighted mirror, order up a soak with their voice-activated bathtub faucet, pick your spritz with their voice-command shower systems—and, yes, even apply a number of controls to the toilet!

Kristen Hicks at SeniorAdvisor.com says voice-activation improvements like these are helping countless homeowners age in place, by turning lights on and off, keeping grocery and to-do lists, reminding folks to take meds, changing interior temperature settings, using voice-activated technology to be sure doors are locked, and, most importantly, calling for help in an emergency. Hicks says while many home alert systems require reaching a phone or a button, a voice command can be issued without having to move.

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