FHA? Conventional? Jumbo? VA? ARM?
We’ll find the right loan for you.

Jumbo

A “jumbo mortgage” is a loan that exceeds a particular county’s loan limits (see “Conforming” above) in most cases. Jumbo mortgages usually have stricter underwriting guidelines because they are not backed by Fannie Mae or Freddie Mac, but are instead held or securitized by large banks or private funds. Stricter guidelines include tighter debt ratio requirements, larger down payment and reserve requirements, and tighter credit standards. You can purchase a primary residence, investment property, or a second home with a jumbo loan.

Interest Rates & Qualifications

Jumbo loans used to be associated with higher interest rates, but that is no longer the case for highly qualified borrowers.  JVM’s most competitive jumbo loans provide rates as much as 1/2 percent lower than the rates associated with “Conforming” loans.  To qualify for the most competitive jumbo loans, however, borrowers need to have excellent credit and substantial liquid reserves after close of escrow equal to at least twelve full housing payments. These guidelines do not apply to all jumbo loans though, as we offer a large variety of jumbo loans for all types of borrowers. Jumbo loans with less stringent guidelines, however, will have higher interest rates.

It should also be noted that many jumbo lenders allow jumbo loan limits to overlap with Fannie Mae’s “High Balance” loan limits. As a result, highly qualified borrowers often qualify for jumbo financing even when their loan amounts remain within  “conforming limits.” And finally, we offer jumbo loans in the form of 30-year fixed and adjustable rate mortgages.*

*Disclosures

• No down payment required*
• Impound account (see JVM Buyer’s Guide) is always required
• No monthly mortgage insurance
• A one-time funding fee is required at close. The funding fee can be financed into the loan amount, similar to FHA’s up-front mortgage insurance.
• Lower interest rates than conventional loans
• Can only purchase as a primary residence
• Condos must be VA-approved

*Disclosures

Non-QM

“QM” stands for “Qualified Mortgage,” and it is a regulatory term associated with most of the mortgages we see underwritten today, including FHA, VA, Jumbo, and Fannie Mae and Freddie Mac loans.

We offer a large variety of “Non-QM” loans for borrowers who fall outside the typical “QM” box.

Examples of Non-QM loans include:

• Loans that use bank statement deposits for income verification;
• Loans that use liquid assets (amortized over a period of time) for income verification;
• Loans with 40-year amortizations;
• Loans with interest-only payments; and
• Loans for unusual properties such as large acreages

Non-QM loans do not represent a return to the sub-prime lending that took place prior to 2008, as these loans require substantial down payments and income documentation of some sort in all cases.

But, for borrowers with unique circumstances, such as self-employed borrowers who don’t show a lot of income on their tax returns, non-QM loans represent a great opportunity to still obtain mortgage financing.

The rates and fees for Non-QM loans are typically higher than they are for QM loans.

Non-QM loans are, however, far more competitive than the “hard money” or “private money” alternatives that Non-QM borrowers used to have to pursue when they fell outside of the QM box.

First/Second Combo

First/second combos are mortgages that fund concurrently or at the same time. The first mortgage is typically at a loan-to-value of 80% or less, and the second mortgage accounts for the loan-to-value portion above 80%. These loans allow buyers to avoid mortgage insurance (see JVM Buyer’s Guide) requirements as well as jumbo loan restrictions.

For example, a 90% loan-to-value purchase of a $700,000 home can be structured as a $560,000 first mortgage and a $70,000 second mortgage. Because the first mortgage is at 80% loan-to-value, mortgage insurance is not required.

Fixed Rate vs. ARM

While the vast majority of borrowers choose 30-year fixed-rate mortgages*, there are other options available. These include 15-year fixed-rate* mortgages and 5, 7 and 10-year Adjustable Rate Mortgages (ARMs). Most 5, 7, and 10-year ARMs* are amortized over 30 years and are actually “fixed” for their initial fixed periods and only become adjustable after their fixed periods end.

Borrowers should only consider an ARM if the spread between the 30-year fixed-rate* and the ARM is significant and if they know their time-horizon (how long they intend to stay in the home) is short. 15-year fixed-rate* mortgages offer lower interest rates (approximately 1/2 %) than 30-year mortgages*, but borrowers need to be certain they will be able to afford the higher the payment that comes with the much shorter term.

We often encourage borrowers to obtain 30-year fixed-rate* mortgages irrespective of circumstances for the safety and the flexibility.

*Disclosures

Rate/Term Refinance

A rate and term refinance is the refinancing of an existing mortgage to lower the interest rate or change the term of the loan (from a 7/1 ARM to a 30-year fixed*, for example) without increasing the loan amount. This is in contrast to a “cash-out” refinance (see Cash-Out below). A key consideration with a rate and term refinance is the amount of closing costs (see JVM Buyer’s Guide) and how fast borrowers can recoup the closing costs with the savings from a lower mortgage payment.

A rule of thumb is that a refinance makes economic sense if the closing costs can be recouped in four years or less. If a refinance is offered at “no cost” to the borrower (something JVM Lending encourages in most cases), the “recoup analysis” is unnecessary.

Borrowers also refinance existing mortgages to eliminate mortgage insurance if they believe they have enough equity in their property. JVM Lending is more than happy to use the tools we have available to help borrowers analyze comparable sales and assess whether or not they have adequate equity to eliminate mortgage insurance.

*Disclosures

Cash-Out Refinance

A cash-out loan is the refinancing of an existing mortgage into a larger mortgage that not only changes the interest and the terms of the loan, but also advances cash to the borrower. Borrowers obtain cash-out mortgage primarily for home-improvements and debt consolidations.

Loan-to-value restrictions and credit standards are tighter for cash-out loans and interest rates are higher. Borrowers need to be certain they have sufficient equity before pursuing a cash-out refinance.