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Idaho Million Mortgage Loan
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Idaho Million Mortgage Loan - Ketchum, Idaho and nearby Sun Valley are showing increased demand for $1MM to $25+ Million Mortgage loan products to keep up with the high demand for luxury real estate.Million Mortgage Loan - $1 Million Mortgage Loan to $40 Million Mortgage Loan programs are referred to in the lending industry by the terms "super jumbo mortgage" or even "mega jumbo loan"
Jumbo mortgages are loans which exceed the Fannie Mae and Freddie Mac conforming loan amount limits. This is why Jumbo loans and super jumbo mortgages are often referred to as "non-conforming" jumbo loans or super jumbo mortgages. The jumbo mortgage limits for residential properties are as follows:
2007 Fannie Mae Conforming (non - Jumbo) Loan limits are as follows:
$417,000 Single Family Residence (SFR or 1-unit, most homes fall under this category)
$533,850 Two Family Residence (Duplex or 2-unit)
$645,300 Three Family Residence (Triplex or 3-unit)
$801,950 Four Family Residence (Quadplex or 4-unit)
Properties exceeding the abovementioned conforming loan limits are considered non conforming or Jumbo, super jumbo or mega jumbo for the purposes of the lending industry.
So what does this Jumbo Loan thing mean for $1 Million to $40 Million Mortgage Applicants?
Traditional, conventional lenders can write conforming, non-jumbo loans all day with relative impunity as Fannie Mae and Freddie Mac, large public/private-type institutional investors, will buy these loans so long as they meet very basic underwriting guidelines. So its very easy to get a non-Jumbo loan.
Regular Jumbo loans, from the conforming loan limit for the respective property type to about a $1 Million mortgage loan amount, are also relatively easy to sell toother banks and typical investors, and banks undertake more risk than they would on a conforming loan but not so much that they cannot efficiently underwrite these mortgages.
Where banks and other traditional, conventional mortgage lenders fall apart is on $1 Million to $40 Million mortgages. Because the traditional mortgage loan business requires lenders to be able to find a market to sell their mortgages so they can get back more money to write more loans, these banks and conventional institutions are very hesitant to undertake large loans unless the loan to value ratios are exceptionally low (meaning you borrow 50% or less of the value of the home). By virtue of this reluctance to write $1+ Million Mortgage Loans, these same lenders have very little experience executing these transactions, resulting in even more conservative loan qualifying criteria for Super jumbo mortgages. Add to that the fact that conventional lenders are set up primarily to serve the needs of "conforming" loan customers, which means they lack the personnel to handle complex multi million dollar real estate financing, and you can see why it is so hard to get an average mortgage broker, direct lender or bank to successfully execute a $1MM to $40 Million Mortgage loan.
So Who Handles Multi Million Dollar Mortgage Loan Financing?
$1MM to $1.5 Million Mortgage loan programs have some availability in the broader markets, however $2MM to $40 Million Mortgage loan products are almost exclusively the province of super jumbo mortgage specialists. Often drawn from the investment banking and hedge fund industries, these private firms handle the overwhelming majority of real estate financing for high net worth / high income borrowers. By bypassing the traditional lenders and banks and going straight to the underlying investors on Wall Street and otherwise, these private mortgage bankers and real estate financiers are capable of orchestrating complex transactions with significantly higher loan to value ratios than would otherwise be possible. A few are even able to allow 70%, 80%, 90% and even 100% financing (no money down) on $2MM to $40+ Million Mortgage Loans, by allowing you to use income producing assets which you retain control of in lieu of a down payment.
$1MM to $40 Million Mortgage Loan programs are available to borrowers in the following states:
Million Dollar Mortgages are available for the high net worth borrowers such as, but not limited to business executives, celebrities, professional sports stars, etc.
The average interest rates on jumbo mortgages are typically greater than is normal for conforming mortgages, and vary depending on property types and mortgage amount.
Loans over a 1 million dollars or super jumbo loans may require more verifications than smaller loan amounts. The higher the loan amount the higher the risk. More reserves may be required as well as higher fico scores.
One reason lenders prefer to have a higher down payment from jumbo loan seekers is the higher risk involved. Jumbo home prices can be more subjective and not as easily sold to a mainstream borrower, therefore many lenders may require two appraisals on a jumbo mortgage loan.
Down Payment from 401K or 403B Retirement Annuity - If you are purchasing a home and have a substantial portion of your assets inside of a retirement account such as a 401K, 403B or other retirement product or annuity, you may choose the increasingly popular option of tapping those funds to make a down payment on your new home. Like any other accounts you may have in your name, such as brokerage accounts and bank checking, savings and money market accounts, most popular retirement accounts qualify as assets to be counted toward your “reserves”, a measure used by mortgage lenders to determine how many months of payments you must have in order to serve as a buffer covering payments you might miss if there were any interruption of your income.
Borrowers planning on using money from their 401k should try to find other resources. This transaction is considered a Hardship withdrawal and will come with a 10% penalty.
It is important to speak with your human resources department as well as your tax professional to determine whether borrowing against your retirement account or taking a straight withdrawal is the best option for you. Be sure to review all possible avenues to access your money.
Retirement accounts such as 401(k) or 403(b) annuity accounts are generally administered or sponsored in whole or in part by your employer. In addition to serving as excellent documentation of your earnings and savings, your 401K or 403B accounts can be used in a variety of ways to help finance your new home purchase. Depending on the specific restrictions applied to your account, you may have the option of withdrawing money directly from the account or “borrowing” money in the form of a loan (against your own funds) which is repaid at a generally low rate of interest. Regardless of whether you cash money out of your account or take a loan against it, be sure to thoroughly document any details of the transaction, including any withdrawal or loan application paperwork, demand drafts, cashier’s checks, deposit tickets, etc. for the purpose of substantiating this source of funds to your lender.
Lenders do treat down payment money from retirement accounts differently from program to program and state to state, sometimes from case to case. In particular, borrowing money in the form of a loan may increase what the lender perceives as your monthly debt obligations, because even though you are borrowing money from your own account, you are still obligated to make a payment every month which you wouldn’t have to make otherwise, and lenders will often consider this to be detrimental to your qualifying DTI or Debt to Income Ratio, making it harder to borrow as much money as you may need. On the other hand, cashing out any type of retirement account will almost always create a taxable event and sometimes also a penalty fee, which generally accounts to more than the nominal interest rate common to the loan option. Speak with your loan officer about the requirements of your individual program and weight the options with him/her or another trusted financial professional.
You may also consider speaking to your employer about any down payment assistance programs which may be available to you as part of your benefits package. These can come in many forms, but it is important to clarify with your employer that any down payment assistance granted does not amount to a loan and that there is no expectation of payment. Why would an employer want to help you make a down payment? Call them old fashioned, but most companies do want their employees to stick with them, and if your employer helped you achieve ownership of your dream home, how would you feel about them?
As with the 401K, 403B or other retirement account options, down payment assistance from your employer should be documented in detail and all copies of communication, checks, deposit tickets and statements of account, along with signed records stipulating that the funds are given freely and not to be repaid, should be kept for submission to your lender.
If you intend to withdraw funds from these types of accounts to use towards your down payment, be sure to let your mortgage consultant know in advance, as these transactions can take a considerable amount of time to be processed.
Quite often if your down payment comes from your 401k or retirement fund, there is no penalty. Speak to competant tax professional and mortgage broker.
This post has been filed under : down payment, 401(k), 403(b), retirement savings