Happy New Year. Should old interest rates be forgot, let us remind you how low jumbos could go: 4.03% for a 30-year, fixed-rate jumbo in December and 2.81% for a five-year, adjustable rate jumbo in October.
But expect more uncertainty in the coming year. Last month, the Federal Reserve hinted at raising interest rates in 2015 but gave no indication of when that might occur. As a result, lenders and mortgage brokers are encouraging their clients to lock in now.
“We’re seeing more jumbo loans right now, and the rates are probably the best in years,” says Bill Banfield, vice president of capital markets at Quicken Loans. “It’s a good time to be in the market for a jumbo mortgage.”
To ring in the new year, we asked some mortgage experts for their best tips when getting or refinancing jumbo loans, which exceed limits of government-backed loans, $417,000 in most parts of the U.S. and $625,500 in some high-priced areas.
Get preapproved. To get preapproved, borrowers must provide complete documentation of income, unlike prequalificationl, in which the loan officer may ask just for a stated income. Prequalified buyers in hot markets like New York and San Francisco can prove to sellers weighing multiple offers that they can afford the home, says Brad Blackwell, executive vice president at Wells Fargo Home Mortgage. “You want to be confident in your ability to buy that property,” he adds.
Prepare for paperwork. Overall documentation requirements are much higher than before the real-estate bust, especially for borrowers with more complicated financial profiles, such as self-employed individuals or people with seasonal bonuses, Mr. Banfield says.