According to the report published by the National Association of Realtors and Professional Madison Realtor, titled Existing Home Sales Report, it has been found that the housing market is in a recovery mode.
One of the most outstanding data provided in the report says that since July 2018, properties worth over $500,000 comprised about 11% of all the confirmed sales and properties worth below $100,000 comprised about 20% of the aggregate sales.
Moreover, the NAR’s report also revealed that there was a 19% jump in sales of properties worth upwards of $1 million during the month of July 2018. We saw this in our Condos for sale in Madison WI. This increment in sales of luxury properties has been attributed to the slumped jumbo mortgage rates that are fueling the demand for more such properties.
Current jumbo mortgage rates
High net-worth individuals can have a look at the current jumbo mortgage rates which have been given below to serve as a reference while shopping for a luxury property:
- 30-year fixed rate jumbo mortgage loans are available at 4.250%.
- 15-year fixed rate jumbo mortgage loans now cost 3.125%.
- 5/1 adjustable mortgage loans are being given at a rate of 2.250%.
The jumbo mortgages listed above have an origination cost of about 0.7-1% charged on them. However, only homebuyers with a steady source of income along with an impressive credit rating are eligible to take advantage of these rates.
Jumbo mortgages – How to get them
The real estate market is positive for buying luxury properties. It forecasts the return of the private mortgage lenders who gave around $38 billion as jumbo mortgages to buyers during the past 2 quarters of 2018. Therefore, people who want to buy high-end properties should follow the below mentioned steps in order to get a jumbo mortgage loan to finance their luxurious purchase:
- Mortgage brokers – These real estate professionals make getting the loan processed a cakewalk for the homebuyers. They widen the scope and reach for jumbo loans because of their influential industry contacts.
- Fannie Mae and Freddie Mac – Jumbo mortgages are not bought by the government-approved mortgage organizations like Fannie Mae or Freddie Mac. As a result, they are comparatively costlier than normal mortgage loans. So, homebuyers can approach a mortgage lender and get as many affordable loans as possible. In order to achieve this objective, homebuyers have to devote their time and energy towards local market survey and obtain multiple mortgage quotes.
- Down payment – The more homebuyers pay as a down payment, the better. This is because even now there are some risk left in the jumbo mortgage market which is compelling the lenders to ask for a minimum of 20% as down payment and if the situation permits they may charge higher. Through this amount, lenders try to minimize the risks directly related to their investments. Therefore, homebuyers should calculate their mortgage affordability by analyzing their financial health through a jumbo mortgage calculator and make down payments accordingly.
- Mortgage application – Homebuyers should check their mortgage application several times before officially submitting them for the lender’s approval. Jumbo mortgage revolves around a highly competitive loan market, so applicants must ensure that they have given all the appropriate information in a proper format, as asked by the lenders. Any errors on the loan application will be revealed by the database applications used by mortgage lenders that will get the application rejected.
Finally, luxury homebuyers should understand the closing costs of jumbo mortgages. Many times, lenders dupe borrowers with the offer of a reduced interest rate but make up the deficiency by including additional costs like processing fees, origination charges, etc.