Move Up BuyersFebruary 07, 2017

What you need to know about stepping into the jumbo market…

Here in Reno, we are seeing quite a few buyers getting ready to make their second home purchase.  These are the clients we tend to call the “move-up buyer”.  Their first house was quaint, cozy and a solid investment.  They spent a few years doing weekend projects and becoming experienced with nuances of homeownership – from having to pay for all the repairs to property tax adjustments.  They also built some equity. Now they are ready to turn that equity into a down payment on maybe a bigger home in a better school district for the kids they are starting to imagine in their lives.

Oftentimes, especially in today’s market, that bigger and better home is going to be putting them into the jumbo financing market.  The conforming loan limit here in Washoe County is $424,100.  If you are borrowing more than that, you are stepping into jumbo territory and there are a couple things to be aware of:

  • At least 10% down is required. Of course, 20% is ideal and will yield better loan terms but don’t be deterred if that much just isn’t possible for you.
  • You’ll need to show you have a couple months’ reserves to make the mortgage payment (on top of your down payment). The good thing about reserves is that they don’t have to be liquid.  You can use a retirement account to show you have these funds available in case of emergency.  You won’t be required to actually move or withdraw any money.
  • Be prepared for a slightly more stringent loan process. The bank will scrutinize your file a little more than your last purchase.  There isn’t as fluid of a secondary market for jumbo loans, so this means lenders and investors will be triple checking every aspect of your loan file and most likely asking you for additional documents.
  • Ask about ARM products. When you’re borrowing this kind of money, it’s important to be informed about all of your loan options.

Of course, it’s best to start all this research before you start looking at homes – so you want to connect with your mortgage advisor to update your pre-approval before you call your realtor or walk into that builder’s showroom.jumbo-loan