Jumbo Mortgage Approval Orange County CA: Orange County covers a lot of Southern California Territory covering some 948 square miles. From Fullerton to Newport Beach to San Clemente to Anaheim, Orange County is home to some 3 million residents making it the third most populous county in California and the sixth-most in the U.S. And after a slump in home prices toward the end of the last decade, property values again are on the rise and have gradually surpassed home values prior to the decline. The median home value for Orange County today is right around $650,000 which is slightly higher than the current conforming loan limit of $625,500. This means jumbo financing is an option for more home buyers in Orange County compared to other spots in the United States.
While most jumbo lenders approve loans using the same basic guidelines they may also add additional requirements in order to obtain a jumbo mortgage approval. For example, jumbo loans may require a minimum down payment of 10 percent and a minimum credit score of 700, while another jumbo loan might ask for a 25 percent down payment and a 720 score. These individual adjustments to jumbo loan programs in Orange County can vary slightly depending upon the appetite of the individual jumbo lender. Read below for 95 percent jumbo options.
Lenders determine affordability by using debt-to-income ratios. This is a percentage of housing and total monthly debt compared to gross monthly income. For example, let’s say you’re buying a home in Huntington Beach and the sales price is $975,000 and you’re making a 20 percent down payment borrowing $780,000. Using a 4.00% 30 year fixed rate, the principal and interest payment is $3723. If monthly property taxes are $500 and insurance $250 per month, the total mortgage payment is $4,473. If gross monthly income is $13,000, the housing debt ratio is $4,473 divided by $13,000 = .34, or 34. Jumbo lenders like to see this number between 33 and 38.
In addition to the mortgage payment, lenders also add up any remainder credit obligations such as an automobile loan or installment loan. Let’s say there is a car payment of $700 and an installment loan of $200. Now the total monthly debt is $5,370 and the total debt ratio is .41, or 41. This is the target debt ratio used by many jumbo lenders however some programs allow this number to exceed that providing evidence of compensating factors such as a credit score above 750 or a significant amount of cash reserves available.
Some borrowers however might choose to take advantage of low rates currently available and decide to leverage as much as possible by financing up to 95% loan to value. That’s right, jumbo financing is available to eligible home buyers up to $1,000,000 with only 5% down payment required. Buyers can read about all the latest nationwide 95% Jumbo requirements here. Buyers can often choose between two options:
1. Single loan 95% Jumbo with NO PMI.
2. Combo first mortgage at 80% of the sales price and the second mortgage at 15%.
A Jumbo loan specialist can run the math comparing different scenarios to discover the ideal jumbo financing option for your situation.
Please see all of the latest 2016 Jumbo loan guidelines here
If you’re employed and receive a regular pay check you’ll be asked to provide your two most recent pay check stubs and two years of W2 forms. If you’re self-employed you can expect to be asked for your two most recent federal income tax returns, a year-to-date P&L and business bank statements in addition to your personal financial information.
Most sellers today, especially so in Orange County, require that all offers include a preapproval letter from a lender. When you select your jumbo lender, ask your loan officer to provide you with a preapproval letter which tells the seller that not only have you applied for your financing but the lender has reviewed your financials as well as your credit history. Providing such a letter will give you a hands-up compared to other potential buyers without one. Once you get an accepted offer for a home in Orange County, having previously provided your personal information means your loan approval will be a smooth process.
Questions about any of the Jumbo mortgage options listed above? Contact Five Stars at www.FiveStarsMortgage.com