Federal Court Says FHFA Structure Is Unconstitutional

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Judges say the Federal Housing Finance Agency, which is run by a single director, is “unconstitutionally insulated from executive control.”

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Help Your Clients Prep Before Disaster Strikes

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Pass these tips on to homeowners so they can get equipped for a storm, flood, or hurricane.

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Home Shoppers Get ‘Extra Time to Find the Right Home’

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Mortgage rates barely budge, giving borrowers some breathing room in their real estate search, Freddie Mac reports.

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House Sets Sights on Flood Insurance Extension

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Congress has until July 31 to extend the National Flood Insurance Program or risk a lapse in coverage for 5 million homeowners.

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Many Owners Lack Sufficient Insurance to Cover Disasters

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Limits on their home insurance policies are too low to cover the full cost of repairing or rebuilding.

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Realtor.com® Updates Make Searches More Seamless

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The site launched several enhancements this week to improve load times and enable side-by-side listing comparisons, among other items.

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Homebuilding Dips to 9-Month Low

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Rising material costs are making new construction more difficult, builders say.

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REALTOR® Force Grows 6% as Rookies Flock to NAR

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There may be fewer homes to sell but that hasn’t deterred more people from entering the real estate business. NAR announced a significant rise in the number of REALTORS® in the last year.

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Tips to Help Your Buyers Navigate a Cooling Market

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In June, housing starts fell by 12 percent—a sign that prospective buyers are becoming more hesitant toward rising housing costs and shrinking inventory.

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What Is a Jumbo Mortgage and When Do You Need One?

(TNS)—Home prices have shot up in some areas of the U.S., to the point where buyers need jumbo loans to finance them. In mortgage-speak, jumbo refers to loans that exceed the limits set by the government-sponsored enterprises (GSEs) that buy most home loans and package them for investors.

Jumbo mortgages, or jumbo loans, are those that exceed the dollar amount loan-servicing limits put in place by GSEs Freddie Mac and Fannie Mae. This makes them non-conforming loans.

As of 2018, these limits are $453,100 in all states except for Alaska, Guam, Hawaii and the U.S. Virgin Islands, where the limit is $679,650. The conforming limit is higher in counties with higher home prices, so be sure to check your area’s loan limits.

The maximum loan amount varies by lender. Borrowers can get fixed- or adjustable-rate jumbo mortgages with various term options. The mortgages can be used for primary homes, as well as for investment properties and vacation homes.

How to Qualify for a Jumbo Mortgage
Jumbo lenders usually have stricter underwriting guidelines. The main reason for this is that they’re not backed by Fannie or Freddie, so they’re riskier loans. On the flip side, lenders have more to gain since the dollar value is higher and they can offer additional services to these wealthier customers.

The three common hurdles borrowers must clear to get jumbo loan approval are larger income, higher credit scores and greater reserves, says Robert Cohan, president of Carlyle Financial in San Francisco.

“To consider a jumbo loan the FICO scores have to be higher. The average is around 740, although I have seen some as low as 660,” Cohan says.

Borrowers whose scores fall beneath the normal requirements usually have to offset it with a low debt-to-income ratio.

“If you’re high-leveraged and you have a low credit score, it’s going to be hard to get a jumbo loan,” Cohan says.

Borrowers should be prepared to show enough reserves, or assets, to cover between six and 12 months’ worth of mortgage payments. The down payment on jumbo loans is, on average, between 10 and 20 percent.

“Anything lower than a 10 percent down payment and you’re probably going to pay for it in higher rates,” Cohan says.

What Are the Benefits of a Jumbo Mortgage?
The main benefit for borrowers is that a jumbo mortgage allows them to go outside of Fannie and Freddie limitations. You can still get a competitive interest rate and finance the home of your choice without being restricted by the dollar limit on conforming mortgages.

The rates on jumbo mortgages fluctuate and may be higher or lower than the conforming mortgage rate. Recently, a 30-year jumbo rate was 4.62 percent, eight basis points lower than a conventional 30-year fixed rate of 4.71 percent.

Jumbo loans are a convenient way to finance property. Instead of getting two conforming loans to finance a home, the jumbo option eliminates that need. Some borrowers prefer to finance more of the home’s cost rather than tying up cash, making the jumbo mortgages a helpful financial tool.

©2018 Bankrate.com
Distributed by Tribune Content Agency, LLC

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