Borrowers get jumbo mortgage loan after initial rejection

Mortgage banker: Terry Hastings,

Home value: $800,000

Loan amount: $640,000

Loan terms: 4.25 percent 10/1 arm Backstory: Hastings received a call from a couple who were referred by their Realtor. They were purchasing a larger home in their same town but had been rejected by their current bank. Could he help?

Hastings asked a series of questions about their scenario, plans and ultimate mortgage goals. The couple was selling their current home but it wouldn’t close for almost three months. Once the home closed, they would have 20 percent to put down toward the new home. However, their current bank was rejecting them because they said they needed to put down more money.

Hastings explained their predicament. When a mortgage loan exceeds $601,450 in Fairfield County, it is no longer eligible for purchase by the GSEs (Government Sponsored Enterprise) known as Fannie Mae and Freddie Mac.

Since the government won’t buy the loan, banks are forced to either keep the loan on their books or sell it to non-government investors. Simply put, the investors and banks have the right to set whatev- er rules they want as far as down payment as they are taking the risk.

Plus, Hastings’ cautioned, with closing 90 days away, many banks would not offer a rate lock.

Although the borrower’s large bank had set a minimum of 25 percent down on jumbo loans, this was not the case for all banks. Hastings’ bank had a variety of investors that gave them the option of doing jumbo loans with up to 90 percent financing.

Hastings asked questions about the home and how long they envisioned staying there. Based upon their situation, he suggested a 10/1 adjustable rate mortgage where the rate would be locked for ten years saving them almost $200 per month over the 30-year rate.

In addition, they could lock for 60 days and “float down” if the rate dropped during that period. His bank also allowed them to purchase an extension of 30 days to accommodate the long-term closing. For the borrowers, they could lock in knowing that their rate could only go lower.

The borrowers agreed with Hastings’ advice and provided the necessary documentation, all via e-signing and scanning. Ten days later they were approved. Terry Hastings, Total Mortgage Services, 203-470-5434, Terry Hastings.com