Financing Options Designed To Match A Variety Of Financial Circumstances

By Jon McBride

In many markets, executive homes and homes in developments are in great demand. And the building industry has responded. Yet home buyers who are eager to purchase newly built homes that meet their dreams occasionally may wonder about financing options and affordability.
Less than a decade ago, home buyers who wanted to purchase higher priced homes had to seek out highly specialized lenders for their mortgage financing. No more. Leading lenders now take the approach of offering multiple options to help specific consumers qualify for loan programs that match their very specific financial circumstances. Today, mortgage originators have access to products, programs, and services that help buyers attain the home of which they’ve always dreamed.

One of the basic financing concerns that apply to buyers of higher priced homes is qualifying for the loan amounts they need for a newly built home of the size desired and with the upgrades, amenities, and other “extras” that are popular among buyers today. Another concern for some buyers is receiving the competitive interest rates and terms without tying up a lot of cash. Lenders often have products and programs in their toolkits designed to address both of these major concerns. 

Primarily, loan programs designed to address these circumstances are all about flexibility. Great examples of the flexibility I’m referring to are loans in the jumbo or super-jumbo range. 

Many buyers may want to borrow more than the conforming loan limit (a maximum amount set by Fannie Mae and Freddie Mac, currently at $359,650 for a single-family residence for 2005). These buyers may choose a jumbo or super-jumbo home loan product, which are available in amounts of up to several million dollars. 

In the past, jumbo loans had been available from a relatively few number of specialty lenders. These loans were not subject to the standardization and economies of scale that lower the costs of traditional loans. Thus, jumbo pricing was not as competitive and limits on maximum loan amounts were more likely to be less than a buyer’s desired loan amount. Today, most of that has changed.

Thanks to technological excellence and other factors, jumbo loans are now common on the product menus of the nation’s top lenders. Typically, they are also more competitively priced. And loan amounts may be available in maximums as high as several million dollars. Jumbos and super-jumbos are options that can help many buyers, yet there are others who may find that their unique financial circumstances require another type of flexibility.

Lenders have recognized that a common thread among a great number of home buyers is the need for flexibility in monthly mortgage payments. Within the last few years, programs have become available that enable qualified borrowers to choose varying monthly payment amounts, including payments that represent an interest-only amount. Again, these options may not be the best fit for everyone. For example, people who are self-employed, have commission-based income, or own a business may find monthly payment flexibility is a good match for them. Others may not. 

Options and choices can be wonderful things. But let’s be honest … all of those choices can be confusing, too. I encourage all home buyers to sit down with a mortgage loan professional and ask for assistance. Responsible, reputable professionals not only bring experience and expertise to the conversation, but they also understand that the best approach is helping buyers identify a home loan that matches their unique financial circumstances.

Jon McBride is branch manager of the Durham office of Countrywide Home Loans, located at 4620 Creekstone Dr.
He may be reached at 941-6440. Additional information is also available at < www.countrywide.com>.