According to Wall Street Journal’s BuySide, “to buy a pricey house or live in an expensive location, many home buyers must go big to go home.” That means they need jumbo mortgages.
A jumbo mortgage comes with a different set of requirements than government-backed loans. If you need a jumbo mortgage, in amounts from $1.1 million up to $10 million, be aware that these loans represent more risk to lenders than government backed loans.
A personal finance professional with Bankrate said, “When a chef has to eat his own cooking, he’s going to be more picky.” Picky, but not impossible. Here are three ways you can score your ideal jumbo mortgage in LA County:
Watch your Debt-to-Income Ratio (DTI)
Jumbo mortgage lenders, whether they’re a private investment consortium or a bank, want to see that you don’t have too much debt when making a jumbo mortgage offer. They determine whether you have too much debt using a ratio that compares your monthly or annual debt payments to your monthly or annual income. This is called the “Debt-to-Income Ratio” or DTI.
Most jumbo mortgages require a DTI that’s under 43%. For example, if you have income of $15,000 a month, you can’t have combined debt payments exceeding $6,450 a month, which will include the jumbo mortgage payment.
Have good cash reserves
Most jumbo mortgage lenders will want to see that you have enough cash in the bank to cover at least six months of mortgage payments, including property tax, insurance, and any community or HOA dues. Many lenders will want to see at least a year’s worth of reserve funds when considering a jumbo loan.
Work with an experienced mortgage broker
How many times have you looked at an online mortgage interest calculator? It’s interesting to see how just a small change in interest rate can change payment amounts and total amount that you will owe.
An experienced mortgage broker can show you the financial impact of your jumbo mortgage over time. They can become a trusted partner in structuring your financial present as well as your financial future. Probably the single most effective thing you can do to get the optimal jumbo mortgage in Los Angeles is to work directly with an experienced loan professional through California Platinum Loans.
Sources
DeCarbo, Beth. “What Is a Jumbo Mortgage, and How Do You Get the Best Rates?” BuySide WSJ, 21 June 2023, url: https://www.wsj.com/buyside/personal-finance/what-is-jumbo-loan-mortgages-ca4ae765
