Jumbo Mortgages Help Newport Beach Home Sales

Newport Beach lenders are vamping up their jumbo mortgage offers to encourage more people to buy property in the city, part of a widespread attempt to boost buyer activity and support the staggering real estate market.

With prices normally exceeding $1.5 million, Newport Beach homes are prohibitively expensive especially for first-time buyers. Often, jumbo mortgages are required to finance the purchase, as home prices exceed the borrowing profile set by conventional mortgage loans.

Lenders are now offering jumbo mortgages with interest rates near or equal to that of conventional loans. Where one would normally pay upwards of 5% in interest, banks are now open to interest rates of 4.75%--or even lower, depending on the loan amount and closing terms.

Buyers who pay points can further lower the rates, with one point (usually 1% of the loan amount) corresponding to a reduction of 0.5%. That means for a 4.75% mortgage, buying one point will reduce the rate to 4.25%. For fixed-rate loans, the difference adds up significantly over time.

Most programs set a maximum loan amount of $3 million, well within the median range in Newport Beach. They also require a hefty down payment of at least 25% and a minimum FICO score of at least 680, as well as full documentation.

Interest-only options are also available from some lenders, with a rate adjustment of around .125%. The low rates are offered for the first three years, but the loans may be refinanced just as regular sub-prime loans.

Not all industry players believe the jumbo market will help significantly, especially since the offer isn’t permanent. However, it will boost buyer activity for the next few years, which can help revive the market and bring home prices closer to pre-recession levels.

 

Earlier in Newport Beach Real Estate News:
Newport Wins Award for Best Beaches
Newport Beach Home On Private Island Hits Market for $28 Million
Old Newport Beach Building To Be Transformed