Summary: The excitement of a new home purchase can sometimes override wisdom and prudence when…
Summary: A jumbo loan is a type of mortgage that is made in an amount over the conventional conforming loan limit in a specific location. In Seattle, home prices are higher than the average location in Washington state, so loan limits tend to be higher. This article will go over why jumbo loans are more popular in Seattle, especially as prices have increased.
According to a recent report by the Mortgage Bankers Association (MBA), access to jumbo mortgage loan financing has increased in 2020. In and around Seattle, jumbo loans have become an increasingly popular financing method due to steadily rising home values.
Access to Jumbo Loans Increased in Seattle & Nationwide
According to Zillow, the median home value in Seattle, Washington was around $767,900 as of August 2020. That’s quite a bit higher than where it was just four or five years ago. And while price growth has slowed a bit, house values in the area are expected to continue climbing into 2020.
As a result of this trend, more and more Seattle home buyers are using jumbo loans to finance their purchases. That’s not surprising when you consider that the median home value in the area is now higher than the conforming loan limit for King County.
Definition: A jumbo loan is basically a non-conforming mortgage loan that’s too big to be sold to Fannie Mae and Freddie Mac. It exceeds the conforming limit for the county where the home is being purchased.
While jumbo loans often have lower mortgage rates than conforming, they can also have stricter qualification criteria due to the larger amount being borrowed.
According to a recent industry report, jumbo loan access has increased in Seattle and elsewhere across the country. This report comes to form the Mortgage Bankers Association (MBA), an industry group that also tracks home loan trends across the country.
Using data provided by Ellie Mae (a mortgage loan software company), MBA analysts determined that credit availability increased by 1.7% in July 2018. That indicates broader access to credit, which means that it has become generally easier for borrowers to qualify for financing.
According to Joel Kan, MBA’s Associate Vice President of Economic and Industry Forecasting:
“Credit availability continued to expand, driven by an increase in conventional credit supply. More than half of the programs added were for jumbo loans, pushing the jumbo index to its fourth straight increase, and to its highest level since we started collecting these data. There was also continued growth in the conforming non-jumbo space, which reached its highest level since October 2013.”
Median Home Price Has Risen Above Conforming Limit
One of the reasons jumbo loans are in such demand across the Seattle area is that homes have become more expensive. Prices across the metro area have risen steadily over the last few years.
As a result, Seattle, Bellevue, and Sammamish have become three of the priciest cities in the state of Washington. (The median home values for Bellevue and Sammamish are even higher than Seattle’s. Both are nearing the $1 million mark.)
So it’s only logical to see more home buyers seeking jumbo loans in Seattle, and in other relatively high-priced housing markets across the country.
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Sammamish Mortgage is a local, family-owned company that has been serving borrowers across Washington since 1992, as well as those in Oregon, Colorado, and Idaho. Our mortgage financing professionals can work with you to help you determine which one of our mortgage programs is right for you. Please contact us if you have mortgage-related questions, or if you’d like to receive a rate quote.