< Back to JVM's Blog

1st/2nd Combos Instead of Jumbo; Backup Offers; Temporary Loans; Self-Employed Borrowers

a paved driveway lined with lights lead towards a large white home at sunset where 1st/2nd combo financing was used1ST/2ND COMBOS INSTEAD OF JUMBO

This is a reminder that 1st/2nd combo financing remains a great alternative to jumbo.  CA 2nd liens are Home Equity Lines of Credit (HELOCS) while Texas 2nd liens are fixed-rate 2nd mortgages; HELOC lenders tie their loans to Prime Rate (3.25% currently); and most accept revised appraisal guidelines (exterior only or waivers altogether).

California Combo Loan Options

  • $1.48M purchase with 15% down – HELOC Rate 3.99% for 760+ Credit (Symmetry); Max loan of $500,000
  • $1.2M purchase with 10% down – HELOC Rate 3.99% for 760+ Credit (Symmetry) ; Max loan of $350,000
  • $1M purchase with 5% down – HELOC Rate 5.75% for 760+ Credit (GBC) ; Max loan of $250,000

Texas Combo Loan Options

  • $1M purchase with 10% down – 2nd Lien Rate of 6.25% (Amplify); Max loan of $400,000
  • $800,000 purchase with 5% down – 2nd Lien Rate of 5.75% (CF); Max loan of $250,000
  • $680,000 purchase with 3% down – 2nd Lien rate of 6.99% (CF); Max loan of $150,000

20% Down Combo Financing – up to $1.6M

  • With 20% down, borrowers can use combo financing to go as high as $1.58M in CA, and as high as $1.38M in Texas.

BACKUP OFFERS MAKE MORE SENSE NOW

A seasoned agent actually reminded me of this on Friday – with so many transactions falling out of escrow right now, she is making more backup offers with the expectation that many will be accepted at some point.

TODAY’S JUMBO = “TEMPORARY LOANS”

Prior to the 2008 meltdown, loan officers used to sell high-rate subprime loans as “temporary” solutions to be refinanced out of as soon as a borrower’s credit improved.

Slimy loan officers, however, would push borrowers into loans with massive three and five-year prepayment penalties that prevented anyone from refinancing.

Today’s jumbo should be viewed similarly (as a temporary solution) with the added benefit of “no prepayment penalties.”

Hence, today’s jumbo borrowers can and should refinance (at no cost) when rates drop, and not stress too much over today’s rates.

We only ask that borrowers wait six months so we do not get hit with our own massive “early pay-off penalties.

SELF-EMPLOYED BORROWER GUIDELINES – NOT STRICTER NOW

Guidelines are stricter across the board for ALL borrowers now – not just for self-employed borrowers.

There is a misconception that self-employed borrowers are subject to tougher guidelines than W2 borrowers now but that is only b/c the Non-QM channel dried up.

This is b/c it was primarily self-employed borrowers who took advantage of non-QM offerings, such as using bank statements and/or rental revenues as the sole source of income documentation.

Jay Voorhees
Founder/Broker | JVM Lending
(855) 855-4491 | DRE# 1197176, NMLS# 310167