Lowered Conforming Jumbo limit predicament
December 2, 2008 6:56 AM   Subscribe

What options do you have to finance an additional 75k over the conforming mortgage limits?

I realise I should just talk to a lender but I don't really like dealing with those guys and wanted to get my ducks in a row before talking to anyone hence my question.

Our mortgage was under the extended jumbo limits of 729k but above the new limit of 625k. Is there a way to get one loan for 625k and something else (that something else being my question) for the balance of ~75k.

I wasn't aware that I wouldn't be able to get in on the 729 limit during December...
posted by zeoslap to Home & Garden (5 answers total)
You need to talk to a lender. One option is to ask your real estate agent for a referral to a mortgage broker. They'll be grateful to have any business and while some mortgage brokers are unpleasant, a lot are decent people. And they're experts. If you'd talked to one awhile ago you'd have understood about the 729 limit in December. If you talk to one now you'll avoid future mistakes. I've worked with a mortgage broker in San Francisco I trust: send me memail if you want a referral.

What you're asking for is a "second mortgage" and in the past they were quite common in the Bay Area and easy to get. That is, until the meltdown, and a month or two ago it was nearly impossible to get one because no one was lending. The market may have improved a bit, but you need to shop around. Second mortgages generally have higher interest rates. And if the total of the two mortgages is more than 80% of the value of the house you may be required to buy insurance for the loan. It's common to make the first mortgage 80% of the value and only buy insurance on the second.

Another option for you is a seller financed second mortgage: basically you ask the guy selling you the house to loan the money you need. That's been almost unheard of in the Bay Area, but again because of the tight credit market folks are getting creative.

Good luck.
posted by Nelson at 7:38 AM on December 2, 2008

If you get stuck, be sure to try a credit union. Most of them are doing just fine and often they will allow a higher percentage of your equity to be mortgaged.
posted by ulotrichous at 8:11 AM on December 2, 2008

I think one of the problems you'll run into is that these hybrid mortgages are one of the causes of the meltdown.

You take a borrower who needs to get a non-conforming mortgage. They are by definition more risky. But the creative broker breaks in into two mortgages- one is completely conforming, and the other is non-confirming and very risky. Even though the transaction as a whole is riskier, the main mortgage doesn't reflect that and investors in that mortgage won't know about it. Something fails, and the holder of the conforming mortgage is left wondering why his investment failed when it was supposed to be safe.

So the point is, I'm betting that these solutions are hard to get done these days. Unfortunately, you may end up having to pay the true rate for your loan.
posted by gjc at 9:49 AM on December 2, 2008

HELOC Home Equity Line of Credit. Done all the time. Your mortgage broker should be able to work it for you. Mine did.
posted by JohnnyGunn at 10:03 AM on December 2, 2008

True rate of my loan! No way ;-)

I got in touch with a couple of lenders, I'll see what's out there.
posted by zeoslap at 10:55 AM on December 2, 2008

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