Understanding Jumbo Loans

In the recent months we have seen an increase in the demand for jumbo loans. A jumbo loan is not a conventional loan that will be sold to the government sponsored entities, Fannie Mae and Freddie Mac. Conventional loans have easier guidelines/rules and loan sizes are set each year by the government. A conventional loan size across
the nation is $424,100 currently. However, government sponsored entities have another loan product know as a high balance (HB) conventional loan, which is not to be confused with a jumbo loan. Each county limit is set by the government and can be found at https://www.fanniemae.com/singlefamily/loan-limits. To give you
an idea, In Nevada County the high balance loan amount is $477,250, Placer County is $488,750 and most counties in the San Francisco bay area have high balance limits set at $636,100.

A Jumbo loan will exceed those HB loan limits or conforming loan limits. Those loans will not be sold to government sponsored entities but to private investors, most commonly REITs or Wall Street investment banks. For this reason the lender requires much higher qualification requirements and much stricter documentation. Lenders  do not want any chance of a borrower defaulting, so the final investors set the rules/guidelines strictly to lend money for those products.

To start almost all lenders require:
1) Great credit over 740, no blemishes on credit and sufficient trade lines (lines
of credit)
2) Typically a 20-25% down payment
3) Income to debt ratios below 43%
4) Money in savings for reserves.

The lenders go over all documentation with a fine tooth comb and ask a lot of questions. Thus, if your loan officer does not vet your loan qualifications and dig through the guidelines upfront, the loan can be very difficult to close and will likely require extensions. If the borrower does not provide exactly what is asked for, the lender will certainly deny the loan. A good loan team can make all the difference in getting jumbo loans closed in a timely manner. If you have questions regarding jumbo loans, or if we can help you succeed in getting a jumbo loan closed, please feel free to contact us.

Market Report

Inventory in the Lake Tahoe/Truckee area is extremely low, with average months of inventory between 4 and 4.5 months.  Only at the $1.5M and above price point do months of inventory exceed 6 months, which is what the industry considers a “balanced” market (i.e., neither a buyers’ nor a sellers’ market).

If you currently own property in our area, we’d be happy to provide you with a real estate review for your specific parcel(s).

THERE’S NO PLACE LIKE “HOME”

Are we becoming a commuter community for full-time residents? A recent study found that 65% of the the homes in the Tahoe basin are sitting vacant.  When many of these homes are occupied, it’s for short-term or vacation rentals.  Many homeowners offset the carrying costs of their vacation homes via short term rentals, which, unlike a long term rental, still allow them to enjoy their home, as well. Airbnb and other short term rental sites report booming business. A brief check on Craigslist or Facebook and other social sites will demonstrate a serious lack of rentals for either full-time or seasonal employees.  

But what about those who want/need to work here and hope to live here, too?  Shockingly, the average cost of living in the Tahoe region is 10 times higher than the national average.  The affordable housing complexes all report zero vacancies and waiting times ranging from six months to two years. And single family homes are priced out of reach for many.  The lowest priced single “family” home in the Tahoe basin at the time of this writing, is a 584sf 1BR/1BA cabin, priced at $154,950, up on Donner Summit at Emigrant Gap.  Many of our area workers have had to opt to live in Reno, while still working here. There are some school district employees, for example, who commute daily from Loyalton, or even Fernley, NV.good_morning_truckee_-_january_10_2017_-_flyer_-_copy

Our area runs the risk of pricing itself out of reach for full-time residents, who work in the businesses that keep our tourist driven economy going. Recognizing these issues, the Community Collaborative of Tahoe Truckee (CCTT), hosted a housing conversation, moving local leaders to fund and plan a housing needs study.  The study brought together data from Truckee, Placer County, and Nevada County to paint a broad picture of the issues.

On January 10th, the Truckee Chamber of Commerce will host the “Good Morning, Truckee” monthly meeting, focusing on these issues.  Stacy Caldwell of the Community Foundation will present the survey results. 

Also on hand will be an executive from Airbnb to provide an overview of what Airbnb does, the growth in the company and industry, Airbnb’s role in the growing shared economy, an overview of their corporate philosophy, some things they are doing in communities that are concerned about the impact short term rentals are having on housing availability, and where the industry and Airbnb are headed.

Additionally, Ulrik Binzer, CEO and Founder of Host Compliance, the leading provider of short-term rental compliance monitoring and enforcement solutions to local governments, will be featured to speak about Host Compliance, what they do, what they have discovered in Truckee and compare it to other communities they are working with.

“Good Morning, Truckee” is a community forum to provide timely and relevant information on a variety of topics and create a networking opportunity and is open to the public – everyone is invited. It is held the second Tuesday of every month at Truckee Tahoe Airport from 7:00-8:30am. Ticket price for general public is $12; Truckee Chamber members $10 and includes a continental breakfast and raffle ticket.

Online registration is available.

First Time Home Buyer Seminar

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