Making offer on a home - jumbo mortgage questions

Non-investing personal finance issues including insurance, credit, real estate, taxes, employment and legal issues such as trusts and wills
Post Reply
Topic Author
jasonrecite25
Posts: 60
Joined: Tue Apr 11, 2017 1:16 pm

Making offer on a home - jumbo mortgage questions

Post by jasonrecite25 » Sun Apr 12, 2020 12:12 pm

Finally found a house and will be making an offer next week!

Background:
-Moving locally across town, in Northern CA
-Current home value $600k, no mortgage on this house and expect it will move quickly when we sell it
-New home value, $1.2M
-New home down payment $400k
-New home loan $800k
-Credit score ~780
-2016 to 2019 AGI has consistently hovered around $400k
-Both my wife and I work and have been with our companies for ~10 years, 2 kids, jobs are secure, but of course anything can happen. Both of us are 40 years old.
-Other than our current home that we own, have been maxing out 401ks, backdoor Roth IRAs, contributing to 529s, maxing HSAs, etc. for awhile now so will have investment assets to show when applying for the new loan.

I didn't intend to ask for input on the personal finance side of this transaction, but I suspect beneficial to have all of the background, so I shared that above. Open to feedback on the situation in whole. Our goal is to get a $800k loan and buy the new house, then sell our $600k house (so we can buy the new home without a contingent sale of our current home). After all is done with fees, closing costs, and another off topic use of current home $600k sale proceeds, etc. we'll be left with $450k cash. Our plan is to use about $150k of the $450k for new home remodeling and save/invest the other $300k, while keeping the $800k loan in place.

Questions:
1 - This is the 2nd time in my life I have secured a mortgage. The first time I used a broker. This time I think I'm best served to shop rates and go directly to the bank? My research is showing me the best jumbo rates are around 3.2% and 3.3%. Also seems like the best lenders to rate shop are Wells Fargo, Bank of America, Ally, US Bank, PNC Bank and maybe 2-3 others. Anything I'm missing, is this the right approach and right banks to pursue?

2 - How many banks should I work with? 2 or 3 maybe? While I don't want to serve up paperwork unnecessarily, will 2 quotes be enough to leverage them against each other to match the offers? Should I do 3?

3 - It seems like new purchase conforming loan rates are still very high from the recent Fed moves and the massive refinancing volumes that hit lenders. Low 3% rates were surprising on the jumbo side. Anything I'm missing when looking at the rates from a total market perspective? Should I expect jumbo loans to go under 3% in the coming weeks/months when conforming loans also come down?

4 - We have established accounts with Wells and Ally. Will that benefit us at all?

5 - If we get a quote from Wells, I noticed they have select local branches that house their mortgage consultants. Is it in our best interest to work with one of their local folks? I've heard it helps in home seller/home seller agent perception working with a local person. Or should I just submit my info. online?

HEDGEFUNDIE
Posts: 4801
Joined: Sun Oct 22, 2017 2:06 pm

Re: Making offer on a home - jumbo mortgage questions

Post by HEDGEFUNDIE » Sun Apr 12, 2020 12:37 pm

Get a relationship mortgage with Bank of America.

If you moved $500k into BoA/Merrill accounts, you can get a 10/1 ARM for 2.5%.

rkot0806
Posts: 3
Joined: Sun Mar 08, 2020 3:22 pm

Re: Making offer on a home - jumbo mortgage questions

Post by rkot0806 » Sun Apr 12, 2020 4:00 pm

jasonrecite25 wrote:
Sun Apr 12, 2020 12:12 pm
Our goal is to get a $800k loan and buy the new house, then sell our $600k house (so we can buy the new home without a contingent sale of our current home).
Given the current market volatility, do you anticipate issues if your home doesn't sell for a while?

cmr79
Posts: 66
Joined: Mon Dec 02, 2013 4:25 pm

Re: Making offer on a home - jumbo mortgage questions

Post by cmr79 » Sun Apr 12, 2020 5:04 pm

I just recently (last few weeks) got a jumbo mortgage from Ally. 15 years, rate was around 2.875% without points/credits. The loan amount, our credit and income are all similar to yours, but we only put 15% down and live in a very different part of the country.

I found the folks at Ally to be helpful, but we had to deal with many different people at different stages of the process, and it doesn't seem like they communicate among themselves very well. I think we got $500 off of closing costs for having an existing Ally savings account.

remomnyc
Posts: 841
Joined: Mon Jan 04, 2016 4:27 pm

Re: Making offer on a home - jumbo mortgage questions

Post by remomnyc » Sun Apr 12, 2020 8:33 pm

HEDGEFUNDIE wrote:
Sun Apr 12, 2020 12:37 pm
Get a relationship mortgage with Bank of America.

If you moved $500k into BoA/Merrill accounts, you can get a 10/1 ARM for 2.5%.
+1
Our 10/1 ARM at BOA is 2.25% with a 0.25% reduction to 2.0% for moving $500k. Wells was 2.375% for the same product. Those were the only two I shopped.

Topic Author
jasonrecite25
Posts: 60
Joined: Tue Apr 11, 2017 1:16 pm

Re: Making offer on a home - jumbo mortgage questions

Post by jasonrecite25 » Tue Apr 14, 2020 2:17 pm

Thanks for all of the feedback. I realize we might have to be patient with selling our home which is okay. I'm furthest along with Wells Fargo, got pre-approved for 3.25% interest rate (3.29% APR) on a 30 year fixed rate $800k loan. They also will give me a .25% relationship discount if I can get $500k into any Wells account, including checking/savings, which I was surprised to hear vs. a brokerage account. Hopeful to lock in at flat 3% for the 30 year fixed.

For reference, they quoted me 2.75% on a 10/1ARM, down to 2.5% with the discount.

Topic Author
jasonrecite25
Posts: 60
Joined: Tue Apr 11, 2017 1:16 pm

Re: Making offer on a home - jumbo mortgage questions

Post by jasonrecite25 » Tue Apr 14, 2020 2:21 pm

remomnyc wrote:
Sun Apr 12, 2020 8:33 pm
HEDGEFUNDIE wrote:
Sun Apr 12, 2020 12:37 pm
Get a relationship mortgage with Bank of America.

If you moved $500k into BoA/Merrill accounts, you can get a 10/1 ARM for 2.5%.
+1
Our 10/1 ARM at BOA is 2.25% with a 0.25% reduction to 2.0% for moving $500k. Wells was 2.375% for the same product. Those were the only two I shopped.
For those that have the relationship discount with BOA/Merrill, is that brokerage account only?

Almond
Posts: 87
Joined: Wed May 01, 2019 3:11 pm

Re: Making offer on a home - jumbo mortgage questions

Post by Almond » Tue Apr 14, 2020 2:56 pm

remomnyc wrote:
Sun Apr 12, 2020 8:33 pm
HEDGEFUNDIE wrote:
Sun Apr 12, 2020 12:37 pm
Get a relationship mortgage with Bank of America.

If you moved $500k into BoA/Merrill accounts, you can get a 10/1 ARM for 2.5%.
+1
Our 10/1 ARM at BOA is 2.25% with a 0.25% reduction to 2.0% for moving $500k. Wells was 2.375% for the same product. Those were the only two I shopped.
I think hedgefundie rate is for interest only. Did you close yours and when. What about fees etc?

User avatar
sergeant
Posts: 1556
Joined: Tue Dec 04, 2007 11:13 pm
Location: The Golden State

Re: Making offer on a home - jumbo mortgage questions

Post by sergeant » Tue Apr 14, 2020 4:36 pm

Based on your questions I think you got this figured out and are handling it properly. The only thing I want to add is don't be afraid to offer less than asking. Homes in this price range aren't moving real quick. Could be different in your locale.
AA- 20+ Years of Expenses Fixed Income/The remainder in Equities.

Golf maniac
Posts: 462
Joined: Wed Dec 27, 2017 2:02 pm
Location: Florida

Re: Making offer on a home - jumbo mortgage questions

Post by Golf maniac » Tue Apr 14, 2020 8:32 pm

Two or three lenders are enough. Looks like Wells is a good offer if you can move some money over to them. The mortgage markets have been choppy with the economic downturn, if I could lock 3% (given 25 BP discount) for a 30 year I would jump on it. No one knows how this restarting this economy is going to work and I expect some turbulence which could impact the mortgage market. Good luck!

MMLC3
Posts: 93
Joined: Sat Jul 08, 2017 6:49 pm

Re: Making offer on a home - jumbo mortgage questions

Post by MMLC3 » Tue Apr 14, 2020 9:02 pm

+1

We bought a home 6 months ago, and for our jumbo mortgage, having ML/Boa Platinum honors level, made a clear difference in mortgage rates we received from 3-4 banks. Also unmatched by brokers.
HEDGEFUNDIE wrote:
Sun Apr 12, 2020 12:37 pm
Get a relationship mortgage with Bank of America.

If you moved $500k into BoA/Merrill accounts, you can get a 10/1 ARM for 2.5%.

Afty
Posts: 1297
Joined: Sun Sep 07, 2014 5:31 pm

Re: Making offer on a home - jumbo mortgage questions

Post by Afty » Tue Apr 14, 2020 9:58 pm

jasonrecite25 wrote:
Tue Apr 14, 2020 2:21 pm
remomnyc wrote:
Sun Apr 12, 2020 8:33 pm
HEDGEFUNDIE wrote:
Sun Apr 12, 2020 12:37 pm
Get a relationship mortgage with Bank of America.

If you moved $500k into BoA/Merrill accounts, you can get a 10/1 ARM for 2.5%.
+1
Our 10/1 ARM at BOA is 2.25% with a 0.25% reduction to 2.0% for moving $500k. Wells was 2.375% for the same product. Those were the only two I shopped.
For those that have the relationship discount with BOA/Merrill, is that brokerage account only?
I’m not sure what you mean by brokerage account only, but Hedgefundie posted the full terms and conditions here: viewtopic.php?f=2&t=280692&start=350#p5168488

Post Reply