Jumbo Loans and White Elephants: Will the Pace Pick Up?

According to Wikipedia, the definition for a white elephant is “a valuable possession which the owner cannot dispose of, but whose cost (particularly of upkeep) exceeds its usefulness.”    Hmmm.  Sounds like some of the higher priced homes we hear may be sitting on the market a little bit longer than usual.  According to the Knoxville Area Association of Realtors (KAAR), the number of homes valued at $500K+ which sold in May 2008 was 34.  But there were 205 new listings.

 

Ok, so I have to give you a little bit of history about the origin of the phrase white elephant.  It really has nothing to do with mortgage lending, but it’s a cool information nugget to know.  Per Wikipedia (yes, again),  in the tales from the Buddhist scriptures, Buddha’s mother dreamt of a white elephant giving her a lotus flower on the eve of Buddha’s birth.  Thus, in Southeast Asia, it became a status symbol to own a white elephant (basically a requirement if you were some type of royalty).  However, due to being sacred and all, the owner couldn’t have the white elephant actually do any work or labor to offset its keep.  Ever wonder how much food an elephant can consume a day?  Think of the clean up after it eats!  You not only get to feed the beast constantly, but you also have nothing to show for it when you’re done.  You get the picture.

 

So, my analogy of there being a few white elephants in the real estate market right now is due in part to the jumbo rates not being so hot as of late.  Loans below $417,000 are sold into mortgage backed securities.  But jumbo loans are sold into private backed securities.  And unfortunately due to the debacle in the mortgage industry that occurred in markets such as Florida, Nevada and California (where a lot of loan sizes are above $417K), there’s not a great appetite for the jumbo loan.  It’s kind of like jumbo loans are liver and spinach on the menu.  A few people will buy that stuff, but it’s not as popular as the cheeseburger.

 

So what to do if you need a jumbo loan?  Make sure you work with a lender who knows their stuff and can present you with options.  Adjustable rate mortgages (ARM) may suit your needs as long as they are fixed for a decent amount of time and won’t paint you into a corner.  An ARM may buy you enough time to refinance at a later date when the market calms down.  You might also be able to wrangle a first and a second so the first loan fints under the conforming loan size umbrella and the second part of your financing is at a smaller loan amount with a higher interest rate.  Just be smart and make sure your lender is smart.  And if you’re selling your home, sit tight.  These homes are moving, however it might be at an elephant’s pace.  Don’t fret, though.  An elephant’s top speed can reach 25 mph.

Watch the video related to consumer finance loan

Some OF The Loans We Offer PERSONAL LOANS Unsecured Personal Loan – Supreme Advances can help make your dreams a reality with an unsecured personal loan. Whether your plans include a vacation, a major purchase, school or consolidating your bills into one, simple monthly payment – we can…

Help answer the question about consumer finance loan

Need help figuring payment and interest on short term loan.?
I am a wedding photographer and one of my clients is now in breech of contract for nonpayment. I have no use for her pictures and would prefer to have my $$. In my contract I financed interest free for 4 months with payment due before wedding. Bride had sob story and I extended for two month. STILL no money two month later. I am now sending her a Consumer Loan Agreement with interest. I have never done this and can not figure what the payments plus interest will be. HELP!

The principle is $1318.07. The interest is 19.99% and there will be three payments starting Sept 30, Oct 15 and Oct 30.

Any sharp financial types out there able to help a photographer out?
Thank you but I do accept those cards but many people do not have credit. I did write that I have contract expecting payment before but out of kindness we extended for her. We will do that knowing how much weddings cost. She is the only one who has never paid. I have no use for her pics and would perfer the $$. I just feel she needs to pay interest now.

About Author

Let My Experience Work For You!

Email your home loan financing questions to Kristin Abouelata, Home Loan Specialist with Mortgage Investors Group, at question@kristinmortgage.com or
call direct: (865) 567-0113 Toll Free: 1-800-489-8910.
For more information visit her website at www.kristinmortgage.com Home Loans Plain Talk.

Leave a Reply

Name (required)

Email Address(required)

Website