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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$685,000 :: 60525 BALMORAL WAY, Rochester MI, 48306-2064

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4 beds, 6 baths
Home size: 4,616 sq ft
Lot Size: 28,314 sq ft
Added: 07/16/18, Last Updated: 07/17/18
Property Type: Single Family
MLS Number: 21475548
Community: Washington Twp (50006)
Status: Active

Stunning custom colonial home located just miles from Downtown Rochester. Small subdivision off the beaten path with 2 peaceful ponds & walking paths. Walk or ride your bike to Stony Creek Metro Park. Home sits on .65 acres, has large private yard, basketball court, large brick paver patio, fire pit & screened porch. Beautifully landscaped throughout front & back yard with exquisite views all year long. This house boasts an open floor plan & plenty of windows to view the beauty of nature surrounding this home with 4700 sq. ft plus 2523 sq. ft. in the walkout.Gorgeous custom kitchen with granite counter tops, matching custom table & access to the deck/screened porch, first floor laundry, dining room, walk in closets, custom molding & features throughout, 2 two-sided gas fireplaces, hardwood floors, central air, tall ceilings & 8 foot doors, custom library/office, 3 car side entrance entry garage, paved street, in ground sprinklers, theater room, extra large closets, Rochester Schools

Listed with First Choice Alliance LLC

Brought to you by Janet Hull and Thomas Bush, Real Estate One, Inc.. Call me today at 1-855-Janet-Tom, or visit my website at www.JanetandThomas.com!

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Furniture And Home Decor Deals To Shop This Amazon Prime Day

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$216,000 :: 1419 TIVERTON, Rochester Hills MI, 48306

3 beds, 3 baths
Home size: 2,207 sq ft
Lot Size: 0 sq ft
Added: 07/15/18, Last Updated: 07/15/18
Property Type: Single Family
MLS Number: 689620
Community: Rochester Hills (63151)
Status: Sold

Listed with Real Estate One-Roch

Brought to you by Janet Hull and Thomas Bush, Real Estate One, Inc.. Call me today at 1-855-Janet-Tom, or visit my website at www.JanetandThomas.com!

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$324,999 :: 5745 COBB CREEK Road, Oakland Township MI, 48306

4 beds, 2 baths
Home size: 2,504 sq ft
Lot Size: 39,639 sq ft
Added: 07/14/18, Last Updated: 07/14/18
Property Type: Single Family
MLS Number: 218065342
Community: Oakland Twp
Status: Active

Welcome to country living near the city! Almost 1 acres of wooded property surrounds this contemporary home! Oakland Twp. Taxes with award winning Rochester Schools! 4 beds and 2 full baths. 2 decks to entertain on. Walk out access in the basement with a large living area. Newly renovated entry level bathroom. New roof in 2017 with gutter guards. Well pump new in 2016. This house is move in ready! Come enjoy perks of Rochester while being away from it all!

Listed with Century 21 Campbell Realty

Brought to you by Janet Hull and Thomas Bush, Real Estate One, Inc.. Call me today at 1-855-Janet-Tom, or visit my website at www.JanetandThomas.com!

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$460,000 :: 1440 Otter Dr, Rochester Hills MI, 48306

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4 beds, 3 baths
Home size: 2,895 sq ft
Lot Size: 16,552 sq ft
Added: 05/21/18, Last Updated: 07/13/18
Property Type: Single Family
MLS Number: 31348123
Community: Rochester Hills (63151)
Tract: Cross Creekno 1
Status: Sold

Don’t miss your chance on this STUNNING colonial w/ finished 3 car garage, located in the desirable Cross Creek Sub! Enter the foyer w/ french doors leading to the living room w/ large bay window flooding the room w/ natural light, & addt’l french doors leading to the open family room w/ natural f/p w/ gas log inserts, & direct access to the deck overlooking the private backyard! Beautifully, updated, eat-in kitchen w/ granite countertops, SS appliances, TONS of cabinetry for storage, & butler’s pantry w/ wet bar & custom wine storage, leading to the formal dining room. This level has a laundry room &half bath. Upstairs is the master suite w/ high ceilings, dual sinks, jetted tub, &stand up shower, & 3 addt’l large bedrooms &full bath. Gorgeous finished basement w/ full kitchen, breakfast bar, exercise room & full bath, making this the perfect spot for entertaining! Addt’l features: new Generac whole house generator, Hardie Board siding, new roof, new deck w/ Sungard retractable awning

Listed with EXP Realty LLC

Brought to you by Janet Hull and Thomas Bush, Real Estate One, Inc.. Call me today at 1-855-Janet-Tom, or visit my website at www.JanetandThomas.com!

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Is Amazon Embarking on Home Insurance?


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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Do ARMs Still Spook Borrowers?

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Even with lower introductory rates, some borrowers may be cautious over adjustable rate mortgages since the housing crisis.

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$300,000 :: 5097 AINTREE Court, Rochester MI, 48306

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Property Photo

4 beds, 2.1 baths
Home size: 2,007 sq ft
Lot Size: 18,295 sq ft
Added: 07/09/18, Last Updated: 07/10/18
Property Type: Single Family
MLS Number: 218063036
Community: Oakland Twp
Status: Active

Coach Lamp Hills rare find! Sprawling split level/ranch with walk out lower level featuring a private guest room with playroom/rec room. This home features a new roof and vinyl siding! There’s also an updated kitchen with granite countertops, brand new stainless steel refrigerator, and stainless steel appliances. You will love the huge pantry, first floor laundry, attached garage, and refinished wood deck! Enjoy cozying up to the natural fireplace from the family room. The living/dining areas have new laminate flooring. Move right in and enjoy the award winning Rochester Schools and walk right to Hugger Elementary which is practically right behind you. Near downtown Rochester and all that the community has to offer. Paint creek trails, cider mills, etc. This home is located on a nice cul de sac type street with close to half acre beautiful lot.

Listed with RE/MAX Nexus

Brought to you by Janet Hull and Thomas Bush, Real Estate One, Inc.. Call me today at 1-855-Janet-Tom, or visit my website at www.JanetandThomas.com!

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