Luxury Jumbo Financing Indianapolis: Indiana Jumbo financing options have started to relax in recent years now that the housing markets is back in positive territory Jumbo loans have typically required at least a 20% down payment in the past, however, some lenders and banks are now offering 5% jumbo loans. 95 percent financing with the choice of a variety of fix rate or ARM terms and NO mortgage insurance. In this posting, we will discuss jumbo loan approval process and standard requirements. Please call Five Stars 7 days a week at ph: 800-871-2636 when questions about approval.
When lenders evaluate a loan application they really issue two approvals, not just one. The borrowers on the loan application will be approved verifying income with paycheck stubs, W2 form and income tax returns when needed. The lender will verify at least a two years work history as well. Additionally, lenders will review recent bank and investment statements verifying there are enough funds available for a down payment, closing costs and lender reserve requirements.
Credit is reviewed and credit scores requested with the best interest rates reserved for those with a credit score of 740 or greater. As the borrowers are being approved, the lender is also busy making the second approval- the property. Your high-end real estate is the lender’s collateral and a lien is placed on the property until the jumbo mortgage is paid. The lender must also determine this collateral is similar to other properties in the area. If so, the property would be considered marketable and should the loan ever go into default the lender wants to make sure they have a property that is similar to other homes in the neighborhood. In higher end developments in Indiana, the properties are more unique in style compared to a traditional suburban development where the buyers choose from a limited selection of two, three and four bedroom floor plans.
Jumbo appraisals will always garner a bit more scrutiny and even in the so-called “super jumbo” category where loan amounts approach $2 million, lenders can require two appraisals instead of just one to make sure the sales price is in line with recent transactions in the area. The appraiser compares recent sales and then assigns a price-per-square-foot valuation and makes adjustments based upon various differences between all the different homes. For example, two houses both at 4,000 square feet on a similar sized lot might have sold for $850,000 and $800,000 respectively. The differences? The first home has a superior kitchen and master bath upgrades compared to the second.
As it relates to value, jumbo lenders use the lower of the sales price or appraised value to establish a loan amount. If the sales price of a home is $925,000 and the appraisal comes back with a value of $900,000, the lender uses $900,000 as the value which means the buyers must either renegotiate or come to the closing table with the additional $25,000 difference. But what about the most expensive home in the area? What, after all variances are considered, is the true value when one property has a contract on it for $1.25 million and the next highest recent sale is $1 million? That’s a $250,000 difference and the lender will want to know the justification for the higher price. The most expensive property in the neighborhood technically doesn’t have any comparable sales and the ones used are less expensive. In this situation, the $1.25 million dollar price might be devalued to more truly reflect market values in the area. Remember, the lender wants to place a loan on a marketable property and the $1.25 million price must be justified with at least one and maybe two appraisals if the lender sees the need.
On the other hand, properties on the lower end of a luxury development benefit from the higher prices of other homes in the area and values are often revised upward when homeowners apply for a refinance and a new appraisal is needed.
Your real estate agent understands what to offer and especially how to justify the price by first researching past sales and market conditions to make an offer high enough the sellers will accept and low enough for your comfort zone. But it’s the most expensive homes in an area, any area for that matter, that are more immune to value downgrades based upon a lack of comparable sales.
Buyer can read more about the latest Jumbo loans options under the loan programs section. Or view the video below. Please call us at Tel: 800-871-2636 or just submit the Request Contact form at the top of this page to learn more about the 95% and 90% financing options available in Indy.
Five Stars is a leading Jumbo loan resource serving buyers nationwide including Indiana: Indianapolis, Fort Wayne, Evansville, South Bend, Gary, Hammond, Bloomington, Carmel, Fishers, Muncie, Lafayette, Terre Haute, Anderson, Kokomo, Noblesville, Elkhart