Options on a Jumbo mortgage?

[ccsauer]

Good Afternoon, all!

I've written on here many times, seeking advice early in my career to ready my credit for life, then again when my wife and I bought our first house, again when setting up a 401(k), and again during a few refinances. I've always loved the help you guys have given, and the straight, honest responses. So, here's my next big thing:

My wife and I are 32. She's a Teacher, I'm a Chemical Engineer. Together, we make $125K, gross, plus-or-minus (bonus, overtime). We have 2 kids with one on the way, living in the house we purchased in 2007 with an 80/15 piggyback loan, refinacned the 80 at 5.25% and the 15 is stuck at 8%. 

Yes, $125K is a lot, i agree, but I also had 25 months of unemployment between 2010-2013. During that time, I watched the kids and looked for a job and collected unemployment, my wife was tenured at her elementary school, so, we never ever ever missed a mortgage payment or car payment. I got a great job in my career in 2013, and have had 2 huge raises and a stellar review. I'm very confident in our future now. Our credit cards are in great shape, our credit is even better; she clocks in at around 830 and I'm around the same, if not a little less. She has $30K or so in her retirement fund (TRS pension, refundible amount) and I have $35K in my 401(k)s. Unfortunately, we had no cash on hand.

Our house, on the other hand, is worth approximately exactly what we owe on it. Our cars are in similar shape, though I bet they are worth a bit more than our loans, I'd have to check.

So, I was looking at our finances mid-last year, and put together a solid plan to save up and get into the school district we want within 4 years. I researched the market rates and got nervous about them raising rates before 4 years was up. Long story short (too late), we were lamenting to my inlaws about this situation we've put ourselves in due to my unemployment, and they decided they would help us by fronting the money for selling our house and the 5% down payment and closing costs of buying a new house.

Perfect world, I'd love this next place to be our forever house, and with the 4-year plan i had put together, that ended up looking like a Jumbo mortgage (Naperville, IL is a pretty expensive place to live in). I'm sure you can see that this is going in the direction of: 5% Jumbos don't exist. 80/15s don't seem to exist over $417K, either.

Without raiding my 401(k), without asking the inlaws for more money, and assuming our house doesn't sell for more than we want it to and/or I can't get cash out of the value of the cars, does anyone know any better options besides "buy a house where the loan is less than $417K?"

Thanks!

[Revelate]

A quick Google "jumbo 5 down" suggested a number of programs do exist now.

The jumbo space has really opened up in the past few years, and since the lender is portfolioing the mortgage (or secondary market not bound by the GSE's underwriting guidelines) it's close to lets make a deal land as I understand it having talked things over with a couple of banks the past few years about it.  Even Wells last year was at something like 10% down for jumbo lending and they're nowhere close to the most liberal lender as I understand it.

The big question is how much house are you looking for: good school district where you're at is different from good school district where I am where entry price for a house with a yard is 750K or more... let alone the best local schooldistrict which is 1MM+ now.  You won't make that on your combined salary, but if you're only talking 500K I'd be awfully surprised if you couldn't find some lender willing to take it on + MI payment.  May need bulletproof scores to support that, but well, you're rocking that in style!

Kudos to you for putting the school district at the top of the priority list btw!

[ccsauer]

Just when I thought I included everything, I forgot the range of houses we're looking at! Sorry.

We're in the Chicagoland area, Naperville, to be specific, where "nice" houses can be had just under jumbo loan ranges, but we're targeting 500K, maaaaybe $550K purchase price. Property taxes in that range go from $7500-$1200 annually depending on the lot size.

I have found ONE lender that has approved us up to a $525 purchase price at 5% down, but the PMI is sizeable, and the rates are 3/4 % higher than the 10% down loans we're looking at (in case our house sells for higher).

As for the school disctrict...well...we may be biased. It's the one we grew up in, and where we met. But, it is ranked in the top 10-20 school districts in Illinois, and couple that with one of the safest large cities in the US, "Best Place to Live," etc., it's what we've been targeting. We are just lucky enough to have parents who enable us to get these sooner and take advantage of the sub-4%rates...maybe

[frugalQ]

have you considered another 80/15/5 mortgage?  there are few banks who offer them now.....mostly credit unions.  And, as long as the first mortgage is 417K or less, it will be considered a conforming loan.

we are going this route with our home and we close in march.

[ccsauer]

That is exactly the kind of loan I'd prefer...But I have yet to find anyone who will do it! Can you reccomend a credit union I can call????

Are you avoiding PMI this way?

Thank you!

[Anonymous]

Just cos I'm nosey, what ya reckon the payment gonna be on a 415k mortgage?   Taxes included.

[ccsauer]

http://www.dinkytown.net/java/MortgageLoan2.html

Got here, you can customize your calculation as you see fit. a $415K loan, 30 year, 3.75%, $8000 property tax, $1000 insurance would be a $2672 payment

[ccsauer]

Apparently, they didn't like the link i had in my response...basically, for a $415K loan, 8000 property tax, 1000 insurance, at 3.75%, it's $2672

[frugalQ]

we are in georgia...and all of the credit unions i've found that have these types of products are local.

someone posted somewhere in this forum that Compass bank has a 80/15/5 loan.  Are they in IL?

yes, we are avoiding PMI.

[StartingOver10]

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@ccsauer wrote:

That is exactly the kind of loan I'd prefer...But I have yet to find anyone who will do it! Can you reccomend a credit union I can call????

Are you avoiding PMI this way?

Thank you!

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Yes the reason to do a structured loan this way is to avoid MI.

Check local regional/community banks and CU's.  Also check correspondent lenders - they are really very, very good to excellent in the jumbo loan space. Stay away from mortgage brokers that don't fund their own loans.