Bank of America is ready to roll out a new program to finance jumbo loans (up to $1.5 million), with 30-year fixed rates starting in the upper 5% range. Don’t expect B of A to sell the jumbos to bond traders this time around however, and don’t expect to qualify without jumping through some hoops.
Bank of America is requiring a minimum 20% down payment, six months of principal, interest, property tax, and insurance payments in reserve, fully documented income, a solid credit score, and a full appraisal to qualify for a jumbo loan.
While other banks are already offering jumbo loans, B of A will provide much needed competition and liquidity in the jumbo segment of the market. However, it remains to be seen whether this will help move high-end value properties off inventory lists and how it will affect the median prices in California.
first tuesday take: High-end properties in New York City are just beginning to sell and the prices are running 60% below a year ago. When we see that type of action in Santa Barbara, Coronado, western Los Angeles County, and particularly in coastal Newport Beach, then the sales of really expensive single family residence properties will begin to take place at a normal sales pace and appraisers will be able to actually find comps for setting values. Don’t expect the jumbos to stop the pricing trend which has begun elsewhere in very high-priced properties around the nation, but expect the jumbo loans to get qualified buyers to begin making the offers that listing agents of these properties have been begging for from lookie-loos at their open houses.
Re: “New supply of ‘jumbo’ financing in pipeline” from the Los Angeles Times