In Seattle the median price for a single family home is $481,000 so unless you can put about 13% down you’ll need a jumbo loan (which is any loan over $417,000). Well the fallout from the sub-prime lending debacle is affecting some lender’s ability to provide jumbo loans even to well qualified buyers. Elizabeth Rhodes reported this weekend on a Seattle area couple who’s loan disappeared the night before closing on their new home because the mortgage broker had suddenly lost the ability to provide jumbos.
The evening before their home purchase was to close, Gary Becker and his wife, Amy Dacus, learned their mortgage to buy a Woodinville home had evaporated.
Unlike subprime borrowers defaulting on loans, the couple had a stellar credit score, a 20 percent down payment, strong employment history and had effortlessly purchased three prior homes.
But their new home’s $670,000 sales price was large enough to require a “jumbo” loan, so named because it was for more than $417,000, the limit the nation’s largest mortgage backers will fund.
Their California mortgage broker had unexpectedly lost its ability to provide jumbos — an event being repeated by lenders nationwide as the underlying funding for these large loans grows scarcer.
If it’s going to be hard for people in Seattle to get jumbo loans, microeconomics will tell you that when demand decreases and supply is increasing, price will go down.