Finding the Joy in a Jumbo Mortgage

Published March 22, 2024

We understand that the most popular time to look for a home is the weekend — after new listings have been published and weekend house hunting activities kick into high gear.  In support of this, we are available when you need us most and want to provide you with timely updates on the market to help you prepare for the weekend ahead.

·         Mortgage Rates1 – The markets breathed a collective sigh of relief following Fed Chairman Jerome Powell’s post-meeting comments – alleviating concerns that the Fed may be justified in keeping its benchmark Fed Funds Rate at current levels for a more extended period of time.  This translated into a bit of improvement in mortgage rates, with our benchmark rate down to 6.750% (6.769% APR).

 

·         Weekly Market Data2 – Yet another week of more than 1,000 new listings coming onto the market pushed active inventory over the 5,500 mark.  Fewer homes going under contract (955) may be a result of last week’s snowstorm, and fewer closings (891) are a function of activity in late February.  Median Days on Market dropped to 9 days, marking the seventh straight week of declines and an indicator of the proportion of homes that are going under contract in their debut weekends.  (Source REColorado, all DMAR counties, this past week – Thursday to Wednesday).

 

·         Columbine Team Insight – It was another competitive week with 44% of offers being accepted.  Those that lost out were facing significant competition, something we have started to see more frequently over the last week or two.  Of those offers that were accepted, only one faced competition; the view was that the listing was significantly underpriced to intentionally create a competitive dynamic.  Trying to determine how much to offer, along with the other contract bells and whistles is one of the hardest things to get right.  Armed with comparable sales, realtors can often narrow the range of what to expect, but that is only part of the equation.  Working with the listing agent to understand sellers’ key concerns around inspections, access, and timing, as well as trying to understand the competitive dynamic can help your realtor position your offer in the most attractive light while also ensuring you are protected in the contract.

 

·         Market Trends – Even though the Conventional Conforming Loan Limit is currently $766,550, that may not be enough in a market where almost a third of homes are selling for more than $750k.  When we start to get into those higher price points, it pays to have an experienced mortgage professional who understands the different jumbo loan options that are available.  Since jumbo are considered non-conforming (meaning they do not ‘conform’ to Fannie Mae or Freddie Mac guidelines) there can be a high degree of variability between lenders when it comes to qualification guidelines.  In the past, this has been one of the challenges of determining if a jumbo loan might be a good fit; however, there are an increasing number of jumbo loan programs that mirror conforming guidelines when it comes to things like reserve requirements and allowing for higher debt to income ratios.  In fact, when you are coming in with a down payment of 20% or more, many of these jumbo programs are priced similarly to conventional loans.  While options that allow for down payments of as little as 10% are available, they often come with noticeably higher interest rates.  If you are able to manage the down payment, that million-dollar dream home may not be out of reach – just give us a ring to see how it measures up!

NOTES:

(1)     The mortgage loan scenario presented assumes the purchase of a primary residence, excellent credit, an 80% loan-to-value (LTV), a loan amount of $480,000, a 30-year fixed interest rate of 6.750%, and a P&I payment of $3,113.  The Annual Percentage Rate (APR) is 6.769%, which reflects a lender credit of 0.163% ($782).  Monthly principal and interest payments, which will continue for the stated term until paid in full, do not include mortgage insurance, property taxes or homeowners’ insurance premiums and actual monthly payments may be higher.  Interest rates are current as of 03/21/2024 and are subject to change at any time without notice.  All loans are subject to credit approval.  Other terms and conditions may apply.  Not all loans or products are available in all states.  Regulated by the Colorado Department of Regulatory Agencies, Division of Real Estate.

(2)     Source: REColorado®, Inc for the period 03/14/2024 to 03/20/2024.   Data for Adams, Arapahoe, Boulder, Broomfield, Clear Creek, Denver, Douglas, Elbert, Gilpin, Jefferson, and Park counties. This representation is based in whole or in part on content supplied by REColorado®, Inc. and REColorado®, Inc. does not guarantee nor is it in any way responsible for its accuracy. Content maintained by REColorado®, Inc. may not reflect all real estate activity in the market.

We are excited to have the opportunity to work with you.  Don’t hesitate to reach out as you navigate the market, we’d be happy to help!

44 Cook Street

Suite 700

Denver, CO  80206

303.284.2592

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