On The shore — 05 January 2018

By Robyn A. Friedman

City & Shore Magazine

There’s good news for those planning to purchase a luxury home and finance it with a jumbo mortgage: What used to be a jumbo loan in 2017 may no longer be considered “jumbo.”

Conforming loan limits for mortgages to be acquired by Fannie Mae and Freddie Mac have been raised for 2018. This year, in most of the United States (including Broward, Palm Beach and Miami-Dade counties), mortgages of up to $453,100 are eligible for purchase on the secondary market — an increase from $424,100 in 2017.

In higher-cost areas, such as San Francisco and New York City, the conforming loan limit is now $679,650, up from $636,150.

Federal laws require the limits to be adjusted each year to reflect changes in the national average home price.

What does this mean for those planning to apply for a mortgage?

“The increase will help a large majority of the population,” says Ray Rodriguez, a regional mortgage sales manager for TD Bank. “It offers people a lower down payment.”

Before the increase, a mortgage of $450,000 would have been considered a jumbo loan in South Florida and likely would have been retained by a lender in its portfolio. “No bank would offer that for 5 percent down — usually you would be required to put 20 percent down [on a jumbo loan],” Rodriguez says.

But a $450,000 mortgage is now conforming and eligible to be sold on the secondary market. “So for those struggling to save funds for a down payment, they now have more options,” he says.

Also, conforming loans are processed via an automated underwriting system. Often, these systems allow people with lower credit scores to qualify for loans, Rodriguez says.

 The bottom line: More people will qualify for mortgages. “If you have a 660 credit score, you’ll be able to get a Fannie Mae loan now,” Rodriguez says. “If that were a jumbo loan, no lender is taking that 660 loan.”

That will also help first-time homebuyers or Millennials with student debt that affects their credit score.

 For those about to apply for a mortgage, Rodriguez has the following tips:

Check your credit before you apply for a mortgage. You are entitled to a free credit report from each of the three reporting bureaus once a year. Make sure there are no inaccuracies on your report — and if there are, correct them before you apply.

Do your research. Learn everything you can about buying a home and the mortgage process before you begin your search for a home. Mortgage rates and terms vary widely, so it pays to comparison shop.

Speak with a trusted loan officer before you apply for a mortgage, and get pre-qualified so you know what you can afford.

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