Jumbo mortgage loans are back on the table

By By Mary Ellen Podmolik

Chicago Tribune (MCT)

Published: Thursday, July 18 2013 12:00 a.m. MDT

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.”


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.”


©2013 Chicago Tribune

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