Try getting a jumbo loan …
I don’t normally report on Boston suburban sales but I thought Scott Van Voorhris’s article in the Banker & Tradesman was interesting, especially regarding the new difficulties in obtaining jumbo loans. Here are some highlights from his article:
Despite some promising signs over the past few months, prices in roughly 80 percent of the towns and cities within the 495 beltway were still down through September compared to 2008 levels, often significantly, the numbers show.
The drop in prices come on the heels of a dramatic tightening up of jumbo lending by banks after last fall’s near collapse of the financial system.
Interest rates soared on jumbo loans, now defined in the Boston market as anything above $523,750. Banks also got a lot tougher on down payments, requiring anywhere from $200,000 to $250,000 on a $2 million mortgage.
Banks are also demanding more thorough appraisals – not to mention taking a more critical look at the income of would-be luxury home buyers.
A bank considering whether to grant a mortgage to the prospective buyer of a multimillion-dollar house in Wellesley will first want to see three different comparable sales within the past several months – a difficult standard in a down market.
And financial services execs whose bonuses might typically dwarf their income are now finding banks taking a skeptical view of such income, reducing the amount they are eligible to borrow.
“If you are buying a house in Wellesley for $3 million, we have to find at least three comps in a mile,” said Leif Thomsen, chief executive of Walpole-based Mortgage Master. “Sometimes it’s tough to prove, even though the value is clearly there.”