What does 2014 have in store for Jumbo Loans?

Jumbo loans on the Outer BanksWe have a few months before ushering in the new year 2014, but you may need to hurry your Luxury Home purchase before we toot our horns on New Years Eve to beat the tighter lending standards set for 2014.

According to the Wall Street Journal, Freddie Mac/Fannie Mae may lower the Jumbo Loan limits – but as of right now, we don’t know how much – or if at all. However, if these loan levels are lowered January 1, 2014, some higher end homes which would normally fall into a regular conventional home loan may fall into the Jumbo loan range. More paperwork and higher standards will be imposed making the home buyer come up with a higher downpayment and possibly higher rates.

Also starting January 2014, changes issued by the Consumer Financial Protection Bureau push lenders to allow only qualified mortgage which have met tougher standards to be underwritten. Borrowers will now have the ability to sue their lenders IF the lender underwrites their mortgage even when they don’t meet the new standard and the buyers default down the road.

Lenders are going to be even more cautious than before. Starting in January 2014 these changes will effect the high-net-worth borrowers – they can’t have more than a 43% debt to loan ratio to qualify for their home loan. And will be a challenge in the lower end of Jumbo loans — above $417,000 and $625,000 in the higher priced areas.

All this in addition to the higher/tighter standards already in place.

When shopping for a Jumbo Loan, there are a few things to keep in mind –

Features of the Jumbo Loan may actually be more important than the interest rate.

There will be more changes to loan regulations later in 2014 like an overhaul to the good-faith estimate and truth-in-lending disclosures. It’s looking like these two forms will be merged into one.

But that is then – this is now. Now may just be the time to purchase that Luxury Home on the Outer Banks. Give me a call today and we can go over what your options are and what properties would meet your wants and needs. Buying now just may save you a lot of time, money and headaches.