Dr. Matthew Flak and his wife, Sarah Payne, recently decided it was time to move out of the 1,000-square-foot Chicago condo they shared with a dog and two cats, but they were unsure what kind of mortgage they could get, since Flak had a business loan tied to his dental practice.
To their delight, the couple were able to secure a jumbo loan to purchase a $657,000, 4,000-square-foot home in Orland Park, Ill., two weeks ago that required a 10 percent down payment on a 3.75 percent adjustable-rate mortgage. They plan to refinance the loan into a fixed-rate jumbo loan before the end of the year.
“I wanted to buy a home that we were going to be in for a long time,” Flak said. “It’s a little more than I wanted to spend right now, but it’s only going to get more expensive. I didn’t want to have to buy a house and then go buy another house in five to seven years. If (the rates) go up maybe 2 percentage points, maybe it’s prohibitive for us.”
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That kind of flexibility has been key to getting deals done, and it can vary from lender to lender.
For instance, Chase is offering a jumbo mortgage with an 80 percent loan-to-value to customers who have a 770 FICO score. With a down payment of 25 percent, a borrower may qualify with a FICO score of 735 or 750.
Wintrust is offering a 30-year fixed jumbo mortgage of up to $1 million to customers with a 740 FICO score and a 10 percent down payment. One existing bank customer, a local executive of an international company, had a FICO score of 650 and wanted to buy a $1.5 million home in Chicago’s North Shore area. Wintrust approved the loan, with a 25 percent down payment, and will hold it on its own books.
“You’re not seeing a secondary market for that,” said Ryan Mecum, a Wintrust assistant vice president who will close 16 jumbo purchase loans this month, twice what he did a year ago, in what he calls an “intensively competitive environment” for jumbo customers.
“In ’08 they were in a $450,000 property and would have bought a $700,000 property,” said Urban Real Estate’s Farrell. “They’ve been putting money in their savings account for five years. They’re going out and skipping that and looking at $1 million, $1.2 million homes.”
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