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With a Jumbo Mortgage, the Devil Is In the Details

[ 0 ] March 21, 2013 |
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Jumbo Loans

For loans above the limit of $417,000 there is some good news. Many lenders are finding it easier to get these loans processed and approved. More importantly, the huge interest rate discrepancy between conforming loan amounts and jumbo loan amounts has eased up. Right now the jumbo loans are being offered approximately at a rate 0.50% higher than conforming mortgages. In order to get approved for one of these loans, borrowers need to be aware of the fine details that will be scrutinized.

Income

For the majority of Jumbo mortgage borrowers, these people will be self-employed. That means that the lender will want to see complete tax returns for the business from the past two years as well as personal tax returns for the borrowers from the past two years. In addition, the lender may ask for a recent cash flow statement or record of income and expenses for the most recent quarter.

For employed individuals, the personal tax returns and most recent pay stubs should be sufficient.

Assets and the Paper Trail

Whether it is a purchase or a refinance, most lenders will also ask to see copies of statements concerning the borrower’s various investment accounts. Checking accounts, savings accounts, retirement accounts and any other type of interest bearing account will be reviewed. It is important to note here that any unusual deposit will have to be documented.

What is unusual? Suppose a borrower is self-employed and has averaged a salary from the business of $225,000 per year for the last two years. This would mean that the owner is receiving a gross check of $4326.92 each week or $8653.85 every two weeks. Let’s say, for example’s sake, that the owner routinely deposits a net check of $2480 each week as their salary. This is easily explained with the tax returns. But what if the borrower has a deposit of $4100 one week? Maybe it was from the sale of a used car, a special dividend on an investment or a one-time contract for some additional work. Whatever the case may be, the borrower will need to be prepared to show a paper trail for the $4100 deposit.

Like an accountant will say, it is important to keep copies of everything. Any transaction must be properly documented. Keeping a good paper trail will make the whole qualification and approval process easier on the borrower and help move along the mortgage process a bit quicker.

For additional program information, see our Jumbo Loans page.

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Category: Jumbo Loans

About Inlanta Staff:

Welcome to our mortgage blog. As a mortgage bank we can provide loans using our own funds or we can use the loans and guidelines provided by one of our many lenders. Our wide array of lender relationships provides our customers with the best loan programs currently available today, whether it is conventional lending, FHA purchase loans, or VA loans.

 

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