Jumbo Loans Gaining Popularity in Denver
Jumbo loans are back. An article released by Realty Times suggested that some financial experts are predicting the Jumbo market may do better than the Conventional market this year. A Jumbo loan is one with loan amount over $417,000. Many lenders got away from offering Jumbo loan products after the housing crash several years ago, but that trend seems to be reversing. More lenders are getting back into the Jumbo-lending arena. Typically, interest rates on Jumbo loans are higher than conventional loans, but with the rates holding strong, Jumbo loans are still very appealing. Additionally, is common that Jumbo products require higher credit scores and more money down that Conventional products or FHA.
Even with these higher requirements, increasing sales in the luxury home market are making Jumbo loans a more popular option. The National Association of Realtors reported that sales increased 25.7 percent nationwide in the first quarter over the prior year for homes valued at more than $1 million. A report released by Kentwood Real Estate in July indicates that the numbers are consistent in the Denver metro area with an increase in million dollar sales of 23.6 percent for the month of June.
There were 89 luxury homes sold in metro Denver in June at an average sales price of $1.515 million, an increase over the month of May. The average days on the market also decreased from 213 days for homes sold in May to 190 days in June. This is just over the year to date average of 195 days on the market for the 331 luxury homes sold this year.
With the luxury home market gaining momentum as the year progresses, the Jumbo loan is going to be a key lending product for the mortgage industry. Recently, lenders have loosened up the guidelines on Jumbo loans to offer loan to values as high as 90 percent. This means a buyer could finance a Jumbo loan with only 10 percent down. Traditionally, Jumbo loans maxed out at 80 percent, requiring buyers to come up with 20 percent down payment. These new, lower qualification products demonstrate the lenders willingness to get into this bustling luxury home market.
Contact an expert mortgage broker to carefully walk you through the available options. Kentwood’s market data was gathered from Metrolist Inc.