Jumbo Loans are a Big Thing in Santa Barbara!
In most areas of the country people buying homes get conforming loans backed by Fannie Mae and Freddie Mac which are generally $484,350 or less. However along the California coast and other high cost areas of the country, Jumbo Loans rule, and that’s a good thing! People buying in Santa Barbara need Jumbo Loans even for their million dollar “starter homes”.
How big are Jumbo Loans? They range from $484,351 on up and in Santa Barbara loans of several million dollars are not unusual. These loans come in many different varieties, including Fixed Rate Loans, Adjustable Rate Loans, 5/1 ARMS, 7/1 ARMS, 10/1 ARMS, Interest Only Loans and even Reverse Mortgages.
We also have jumbo loans for investment properties and second homes, which are popular in wealthy communities like Santa Barbara. Many banks, investors and equity funds compete for these Jumbo Loans. At C2 Financial Corporation we work with dozens of sources that offer Jumbo Loan financing, and our goal is to shop around to find the lowest rates possible!
Because people obtaining Jumbo Loans need a higher income to qualify, they are often self employed entrepreneurs with complex tax returns and financials. Luckily I am an expert in working through these stacks of paperwork to make the process painless for both the borrower and most importantly, the underwriter who hands down the coveted loan approval.
How much down payment is needed for a Jumbo Loan purchase? These days there are new loan programs available that only require 10% down for loans up to $2,000,000. The interest rates will be a bit higher for these loans, but it is well worth it to be able to enter the lucrative housing market with so little down. Borrowers putting 20% or 25% down will get a better rate as the lender risk is lessened.
Interest rates on Jumbo Loans vary according to loan type and other factors. While a 30 year fixed will be the safest loan for the long haul, one can obtain a lower rate on a loan where the initial rate is fixed for a shorter period of time. In Santa Barbara, many sophisticated borrowers will choose an Interest Only Jumbo Loan to give them the lowest payments possible. They realize that they can make more money investing their money elsewhere and can always pay down the loan from these savings.