A jumbo loan is a mortgage on anything above $417,000.00 and your luxury realtor can help you figure out if you should sell your luxury property above that amount.
So now you’re selling your luxury property in Florida. Perfect, because people are starting to get back into the market, even for luxury properties. However, like most people, they’ll need a mortgage, which means a jumbo mortgage. That changes the picture, mostly about who you want to sell to, and here’s why.
Conventional mortgages actually have limits as to how much it can be written for. Why? Because mortgages are commonly bought and sold on secondary markets, and are backed by FNMA (Fannie Mae) and FHLMC (Freddie Mac). Over certain amounts neither will back the mortgage. Those mortgages are considered jumbo loans. A jumbo mortgage is a mortgage that is above the conventional mortgage limit of $417,000.00. They were common in many areas of the country when property values were at their peak. Most mortgage companies offer jumbo loans in the conventional formats like fixed rate or interest only loans. There are also LTV or loan-to-value limits that lenders have as well. For most jumbo loans there is usually an 80% or 90% loan-to-value limit on the loans.
Jumbo loans are risky for mortgage companies because of the lack of federal backing. Another reason is because luxury properties can be harder to sell in a short amount of time. Why is this problematic? Well if the buyer defaults on the loan, a short sale will probably not happen. Larger luxury homes are more apt to be affected by valuation shifts. This can hurt a lender if the property goes into foreclosure. Interest rates are usually a bit higher on jumbo loans as well.
In Florida, any mortgage loan over $417,000 is considered a jumbo mortgage. This is lower than other areas of the country, and may mean that the definition of “luxury properties” is different in Florida. If you are selling a property you need to ask your realtor about how to price your home. Why? Those jumbo loans are harder to get, and adjusting your price down just a few thousand dollars may mean the difference between a lot of bids from prospective buyers with conventional mortgages, and someone who will need to qualify for a jumbo loan. It will matter not only to your luxury Realtor but also to you in the long run as a jumbo mortgage may be harder for your prospective buyer to get.
Looking for a GREAT Tampa Bay Luxury Realtor who can help you make sure your home is priced right? Give us a call today 727-410-0336