Laguna Beach Keeps Up Jumbo Mortgage Market

Jumbo financing is thought to have all but disappeared throughout Orange County, as home sales slowed down and price cuts hit even the most high-end markets. But in Laguna Beach, buyers are taking out larger loans and lenders are steadily granting them.

With active listing prices averaging close to $4 million, Laguna Beach is the ideal spot for originating jumbo mortgages—non-conforming loans that exceed the amount that can be insured by the Federal Housing Administration (FHA).

Conforming loans are basically those that can be sold to government-owned servicers Fannie Mae and Freddie Mac. For single-family homes in Orange County, the limit for such loans is $729,750—well below the average in Laguna Beach.

Studies show that of the 91 homes sold for more than $1 million in 2009, 53 were bought jumbo financing—more than half of the total sales—while the rest were paid for in cash. This does not include homes that were only partially financed to meet the conforming loan limit, which is believed to make up another 13% of buyer activity.

Only five of the 38 jumbo loan sales were privately financed, which means that 33 were financed by commercial lenders. These loans are spread across 14 different lenders, indicating that the jumbo loan active is far more active than generally thought, at least in Laguna Beach.

Jumbo loans do not follow identical terms with each transaction, as they are by nature non-conforming. This means that borrowers can negotiate for specific terms with their lenders. Experts advise buyers considering jumbo financing to consult expert brokers or realtors to understand lenders’ offers and avoid common pitfalls.

 

Earlier in Laguna Beach Real Estate News:
Government Programs Can Help Laguna Beach Homeowners
Montage Resort Plans $400 Million Utah Expansion
Emerald Bay Home Slashes Price By $1 Million