The Big Picture: Jumbo Loans Go Mainstream

by Robin Cileno

As mortgage lenders clamber to identify and serve various market niches, jumbo loans have come to the forefront once again. Larger loan amounts are in greater demand, and not just by upscale home buyers, as you might expect. There is no longer a standard jumbo-borrower profile. When you consider that the FNMA conventional loan cutoff is $203,150, it is quite conceivable that in 1995, even first-time home buyers are finding themselves in the jumbo realm.

Savvy mortgage providers have determined that fulfilling the needs of jumbo borrowers means addressing the issues of product availability and pricing. The competitive character of the current lending landscape has prompted mortgage banks to revisit underwriting guidelines and pump up lending portfolios with newly developed jumbo offerings. The consumer-friendly results offer exciting new opportunities for jumbo borrowers to close!

Today, a wide variety of fixed- and adjustable-rate (ARM) jumbo programs are available, allowing home buyers to respond to the fluctuating rate environment. Down payments as low as 5% enable buyers to qualify with less upfront cash, or they can qualify for more of a home. An expanded catalog of eligible property types now includes two- to four-family homes, condominiums, co-ops, second homes and investment properties. Loan amounts go as high as $1 million, and many new jumbo programs allow cash-out refinances.

All sorts of contemporary borrowers are likely to benefit from a renewed effort by lenders to serve the jumbo mortgage market. Take, for instance, those homeowners looking to "trade up" but whose home may have dropped in value to the point that their original down payment is lost. Now, with a rising income, they find they can afford to move "up" to a larger home. Today's jumbo programs enable these homeowners to obtain financing with a lower down payment. Another group of consumers who can benefit are homeowners who may have originally made down payments of 10 to 20 percent. They now wish to refinance, but their homes have decreased in value, and 95% financing is necessary. In the past, they either would have had to settle for a smaller loan or come up with a hefty down payment sum. In the present mortgage marketplace, the attractive pricing of jumbo loan products provides an unexpected, and often unexplored, financial resource.

Today's home buyer needs to know what is available in the mortgage market and understand which program best suits their individual needs. Prospective borrowers, or industry professionals seeking financing for a customer, should look for a lender who can accommodate the widest range of financing scenarios with a variety of mortgage products. Whether it be a jumbo or conventional loan, financing a home should be affordable, convenient, and tailored to suit a borrower's financial situation.

Robin Cileno is regional vice president for BankAmerica Mortgage's New England Region. BankAmerica Mortgage has local offices in Glastonbury, Norwalk and Willimantic, Connecticut and Andover, Centerville, Waltham, Quincy and Shrewsbury, Massachusetts.

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