New home loan rules went into effect at the turn of the new year that may make it more challenging for potential home owners to buy high-end homes. If you’re in the market for a luxury home, here are few things you’ll need to qualify for jumbo mortgages in NJ under the new rules.
Less Debt
One of the most notable changes made to the regulations governing mortgages is the decrease in the acceptable debt-to-income ratio. Prior to 2014, the maximum debt-to-income ratio a person could have was 45 percent; now it’s 43 percent. That 2 percent difference could translate into several thousand dollars depending on the person’s income level.
In the past, banks would allow people applying for jumbo loans to go above the maximum rate. However, doing so now will affect the salability of those loans in secondary markets. Needless to say, banks are going to be less forgiving in this area, so potential buyers will need to further reduce their debt load if they want to qualify for this type of loan.
Bigger Down Payments
A jumbo mortgage loan is defined as a home loan in an amount significantly above conventional conforming loans. While they can be in any amount, lenders typically curtail the maximum amount they will lend on a jumbo loan to conform to the limits set by Fannie Mae and Freddie Mac. These two entities will not purchase jumbo loans from lenders in amounts higher than $625,500 in high-cost areas. This means that home buyers will likely be required to make up the difference between the cost of the home and the amount of the loan.
This difference could be as much as $100,000 or more. But even if the home falls within the set limits, buyers may still be required to put down at least a 20 percent down payment and subjected to higher interest rates.
Qualifying for jumbo mortgages in NJ may be a little more challenging this year. With a bit of ingenuity and fortitude, however, you can find ways to buy the home of your dreams. Start by contacting a reputable mortgage company to find out how they can help you get a jumbo loan in 2014.
