financial

Apache is functioning normally

JPMorgan Chase launched the Chase Home Buyer Grant program in 2021 as part of a five-year racial equity commitment. The year before, nationwide protests sparked by the death of George Floyd prompted industry leaders to reconsider how they serve historically disadvantaged groups. 

JPMorgan Chase is expanding an effort to help close the gap in homeownership between Black and Hispanic communities and the rest of the country.

Residents of some 3,000 additional Black-majority and Hispanic-majority Census tracts in 16 U.S. markets will be eligible for up to $5,000 in grants that are designed to help with down payments and closing costs.

The program’s expansion, announced Wednesday, may help an additional 1,000 customers obtain mortgages, according to Cerita Battles, head of community and affordable lending at JPMorgan. 

The bank does not expect to make a profit on the program, particularly as credit conditions worsen, she said. “At the end of the day, this is a long-term sustainable investment,” Battles said.

Chase Home Lending has already spent more than $30 million to help more than 6,000 prospective homebuyers in majority-minority neighborhoods make down payments and pay closing costs, according to the bank.

The $3.7 trillion-asset bank launched the effort in 2021 as part of a five-year racial equity commitment. The year before, nationwide protests sparked by the death of George Floyd prompted industry leaders to reconsider how they serve historically disadvantaged groups. 

Following advice from regulators, JPMorgan launched a special-purpose credit program that provides mortgage assistance in majority-Black and majority-Hispanic neighborhoods. Under those programs, which are authorized under a provision of federal law, financial institutions can extend credit access to people who might otherwise be denied access to credit, or might be charged unfair rates.

When the bank rolled out the Chase Home Buyer Grant program, it looked first to provide credit access to Black Americans, who face the nation’s lowest homeownership rates. A year later, the program was extended to Hispanic Americans, a group that has the second-lowest homeownership rate.

The grants are made available to any resident of eligible majority-Black and majority-Hispanic neighborhoods — not only to members of specific racial groups — in part because residents of minority communities often fail to identify their race for fear that they may not receive a loan, Battles said.

The adoption of special-purpose credit programs has historically been stifled by criticism that they favor certain races over others. But attitudes have begun to change as regulators have assured banks that the programs do not violate the law, Battles said.

Blair Bernstein, a spokesperson for the American Bankers Association, reaffirmed the trade group’s support for special-purpose credit programs, calling them “an important tool that allows banks to expand access to credit for underserved communities.”

“Homeownership helps build wealth, and these important, responsibly managed programs provide opportunities for more borrowers, particularly as the cost of homeownership rises,” Bernstein said.

Yet, there are still some who question JPMorgan’s program, Battles said.

“There’s still a lot of education that’s still necessary, because all lenders are not participating in this space today,” she said. “I think it’s very necessary for us to be very intentional about our explanation around it  — the how and why.”

JPMorgan has gotten support from nonprofit groups that focus on closing the homeownership gap.

“Homeownership is one of the most important ways to build generational wealth that families can pass down,” said Valerie Navy-Daniels, senior vice president of resource development at NeighborWorks America, a nonprofit organization that supports housing access and affordability. “We thank Chase and other banks for addressing this critical issue.”

Battles said that JPMorgan will be encouraging local market participants to support and promote the Chase Home Buyer Grant program and similar initiatives. She noted that funding from other institutions can be layered on top of the $5,000 grant.

“I would assume that we will likely expand this, expand this program again and go into some other markets, especially if we see the need in the value of going into those particular markets,” Battles said.

To those who doubt whether the grant program makes financial sense, Battles said: “There’s a cost to not being able to serve all who aspire to homeownership.”

Source: nationalmortgagenews.com

Apache is functioning normally

Mortgage applications fell 7.1% from the previous week, following an increase in rates to the highest level since the pandemic onset, according to the Mortgage Bankers Association (MBA) survey for the week ending Jan. 21.

The seasonally adjusted Refinance Index decreased 12.6% in the same period, with applications falling for the fourth straight week. Meanwhile, the Purchase Index declined 1.8%.

Compared to the same week one year ago, mortgage apps overall dropped 34.6%, with a sharp decline in refinance (-46.6%) compared to purchase (-8.5%).

According to Joel Kan, MBA’s associate vice president of economic and industry forecasting, all mortgage rates continue to climb, but the 30-year fixed rate rose for the fifth consecutive week to its highest level since March 2020.

The trade group estimates that the average contract 30-year fixed-rate mortgage for conforming loans ($647,200 or less) increased from 3.64% to 3.72%. For jumbo mortgage loans (greater than $647,200), rates went to 3.56% from 3.54% the week prior.

“After almost two years of lower rates, there are not many borrowers left who have an incentive to refinance. Of those who are still in the market for a refinance, these higher rates are proving much less attractive to them,” Kan said in a statement.

The keys to lending in a post-refi boom world

As record refinance volumes disappear, lenders need to get intimately familiar with their database of customers. Being a resource for all real estate financing needs for your customers will become more important in the next few years than ever before. 

Presented by: CIVIC Financial

Regarding purchases, he said that the decline was led by a 5% drop in government applications, compared to less than 1% drop in conventional loans applications.

“The relative weakness in government purchase activity continues to contribute to higher loan sizes. The average purchase loan size was $433,500, eclipsing the previous record of $418,500 set two weeks ago.”

The refinance share of mortgage activity decreased to 55.5% of total applications last week, from 60.3% the previous week. The VA apps went from 10% to 9.9% in the same period.

The FHA share of total applications decreased from 9.3% to 8.6%. Meanwhile, the adjustable-rate mortgage share of activity increased from 3.8% of total applications to 4.4%. The USDA share of total applications went from 0.4% to 0.5%.

Source: housingwire.com

Apache is functioning normally

If customer satisfaction is your thing, and you happen to need a home loan, you might want to check out Royal United Mortgage.

The company recently topped LendingTree’s customer satisfaction rankings for four consecutive quarters, and have consistently ranked in the top-10 for the past six years.

Another thing that makes them unique is the fact that they offer home equity lines of credit (HELOCs), and a lot of them at that, based on their HMDA data. Let’s learn more.

Royal United Mortgage Fast Facts

  • Privately-held, employee-owned retail mortgage lender licensed in 32 states
  • Founded in 2008, headquartered in Indianapolis, Indiana
  • Funded roughly $1 billion in home loans during 2019 via consumer direct channel
  • Ranked a top-10 mortgage lender by LendingTree since 2014
  • Began 2020 as LendingTree’s #1 lender in customer satisfaction for 4th quarter in a row
  • Most of their business comes from the states of Florida, Indiana, and Texas

Royal United Mortgage is a relatively young company, around since 2008, which is right around the time the mortgage crisis and Great Recession took place.

But they’ve made it through some tough times and mustered over a billion in home loan volume last year.

They’re a privately-held, employee-owned direct-to-consumer mortgage lender, meaning they operate remotely without branches.

At the moment, they seem to be licensed to do business in 32 states, including Alabama, Arizona, Arkansas, California, Colorado, Florida, Illinois, Indiana, Iowa, Kansas, Kentucky, Louisiana, Maine, Maryland, Michigan, Minnesota, Mississippi, Missouri, New Jersey, New Mexico, New York, North Carolina, Ohio, Oklahoma, Oregon, Pennsylvania, South Carolina, Tennessee, Texas, Virginia, Washington, and Wisconsin.

Royal United Mortgage Loan Process

  • They offer a digital mortgage application powered by Ellie Mae
  • You must first get in touch with a loan advisor to get started
  • Prospective can call them up directly or fill out a short contact form on their website
  • Claim to have some of the fastest turn times in the industry thanks to in-house processing and underwriting

To get started, they ask that you either call them up or fill out a short contact form on their website.

Once you connect with a so-called trusted loan advisor, they’ll go over your goals and guide you through the loan process, including an overview of available loan options.

They appear to offer a digital mortgage application powered by Ellie Mae that should allow you to link financial accounts and/or upload key documents.

Additionally, once conditionally approved for a loan, you can check loan status at any time or opt-in to real-time notifications regarding loan progress.

Because they use in-house loan underwriters and processors, they say they’re able to offer some of the fastest turn times in the industry, typically only 2 to 3 weeks (how long does it take to get a mortgage).

All in all, pretty straightforward, though it would be nice if you could apply without having to take the extra step of speaking to a human.

Loan Types Offered by Royal United Mortgage

  • Home purchase loans and refinance loans
  • Rate and term and cash out refis (debt consolidation)
  • Home improvement loans
  • Conforming loans backed by Fannie/Freddie
  • FHA loans and VA loans
  • Home equity lines of credit (HELOCs)

One drawback to Royal United Mortgage is their somewhat limited menu of loan programs.

While they appear to have most of the basics, they’re missing a few major loan types, including jumbo loans and USDA home loans.

That leaves us with conforming loans backed by Fannie Mae and Freddie Mac, along with FHA loans and VA loans.

The good news is that should cover most of the homeowner population.

They seem to focus on mortgage refinances, including rate and term refis and cash out refis for debt consolidation.

They also say they’ve got home renovation loans, though it’s unclear if they’re talking about the FHA 203k and/or the Fannie Mae HomeStyle.

One silver lining is they offer home equity lines of credit (HELOCs), which not all lenders offer these days. So you can tap into your equity without touching your first mortgage.

While they do offer home purchase financing, it seems to make up a small portion of their overall loan volume, maybe just north of 10%.

Interestingly, it is HELOCs that tend to make up the most of their business.

They lend on primary residences, second homes, and investment properties.

Royal United Mortgage Rates

For one reason or another, Royal United Mortgage does not publicize its mortgage rates.

This isn’t uncommon, as many banks and lenders tend to keep their interest rates to themselves.

However, since they don’t advertise their rates, we have no way of knowing how competitive they are in the pricing department relative to other mortgage lenders.

The same goes for their lender fees, which don’t seem to be listed on their website anywhere. This means we don’t know if they charge points or a loan origination fee.

So be sure to get all that information early on before you spend too much time with them in case their rates/fees aren’t to your liking.

Royal United Mortgage Reviews

As noted, they were ranked 1st by LendingTree for customer satisfaction from the second quarter of 2019 through the first quarter of 2020.

That’s four consecutive first place rankings, which seems like a pretty big feat. Additionally, they have roughly 9,000 customer reviews on LendingTree with a 4.9 out of 5-star rating.

Some 98% of former customers recommend using Royal United Mortgage, per the LendingTree website.

They have been Better Business Bureau accredited since 2008 and currently hold an A+ rating with the company.

At the time of this writing, Royal United Mortgage has nearly 400 customer reviews on the BBB website with a 4.5/5 rating.

Like all other mortgage lenders, they have complaints too, which are inevitable when you’re dealing with a large number of customers in the mortgage industry.

But all in all, they appear to be well received by their customers, which is a good sign.

Royal United Mortgage Pros and Cons

The Good

  • Offer a digital mortgage application powered by Ellie Mae
  • Ranked #1 by comparison service LendingTree
  • Excellent customer reviews across multiple review sites
  • A+ BBB rating and an accredited business
  • Offer home equity lines of credit (HELOCs)
  • Free mortgage calculators and mortgage glossary on site

The Maybe Not as Great

  • Not licensed to lend in all states
  • You have to contact them before applying for a home loan
  • Don’t offer USDA loans or jumbo loans
  • Do not publicize their mortgage rates
  • No mention of lender fees on their website
  • They don’t service their home loans

(photo: Sean Davis)

Source: thetruthaboutmortgage.com

Apache is functioning normally

The Récollets locks on Canal Saint-Martin © Hemis/Alamy

When chef Maxime Bouttier was considering a location for his first Paris restaurant, which opened in April, the Canal Saint-Martin offered an enticing mix of relatively affordable rents and excellent travel connections.

“It is much less expensive than the 6th or the 8th arrondissement, where many of my diners will travel from,” he says. “But, at the same time, you feel right in the middle of things.”

What drew Bouttier has proved popular for those seeking a good-value home in a central location, where commercial rents are mirrored by lower home prices. Waterside properties abutting the 4.6km canal, which runs through the 10th and 11th arrondissements and gives the area its name, still cost significantly less than those nearby on the Seine.

Average list prices in the 10th and 11th arrondissements are €9,806 and €10,128 per sq m respectively, according to French property website Meilleurs Agents. To the south, abutting the river in the 4th, the average is €13,813; cross the Seine into the 6th and this increases to €15,540.

Cheaper prices and a central location have made the area popular with younger buyers, including those purchasing for the first time or with smaller budgets, for years. But, with mortgages typically making up a larger share of their total home price, this group has been hard hit by France’s rising mortgage rates.

In February 2022, when Giorgia Rowe, 27, started searching the area for a home to buy, her mortgage broker said she would be able to get a mortgage with an interest rate of 1.2 per cent.

By June, she had found a one-bedroom apartment in the Canal Saint-Martin for €350,000. But, before she could agree the purchase and secure the mortgage, she needed to sell her studio flat. With mortgage rates increasing, it was a race against time: by August, when she was ready to buy, her rate was 2 per cent.

“Another month of mortgage rises and I wouldn’t have been able to afford the home,” she says.

Street art in the Canal Saint-Martin area © Samantha Ohlsen/Alamy

For many, mortgage rate rises have meant they can no longer afford a purchase. Since the European Central Bank started raising interest rates in July 2022, home sales have fallen up to 35 per cent, according to Yves Romestan, chief executive of YRSA Progedim, an estate agency that covers Paris. Nationwide, the average rate for a 20-year fixed mortgage is now 4.02 per cent, according to Crédit Agricole, the French bank.

“The current situation excludes many first-time buyers from the market and many smaller, cheaper properties can now only be targeted by investors,” says Thomas Lefebvre, head of research at Meilleurs Agents in Paris.

Its growing popularity among younger residents has given the Canal Saint-Martin area a distinctive bustle, and the area is dense with a range of spots to eat, drink and shop.

A 10-minute walk from Rue de la Folie Méricourt, where Géosmine, Bouttier’s restaurant, is located, independent shops, bars, restaurants and delicatessens cluster along a section of the popular Rue de Lancry, between the pedestrian canal bridge of Pont Tournant de la Grange-aux-Belles and the Metro station on Place Jacques Bonsergent.

These include bistro and natural wine specialist Le Verre Volé (The Stolen Glass), Viande & Chef, a butcher that opened in 2015, and specialist chocolatier Denver Williams, whose website claims the business is “as Parisian as the Canal Saint-Martin” and exhorts visitors to watch staff shape their wares in the chocolate workshop.

Around the corner is the celebrated covered food market on Rue du Château d’Eau, established in the 19th century. For Bouttier, who frequently makes the 15-minute walk from the restaurant to source produce, it was a draw and adds to the area’s self-contained feel. “It’s a walkable neighbourhood and there’s no need necessarily to go beyond it for what you need, you kind of have it all here,” he says.

Soon after Julie Ciraolo, 33, bought a ground-floor flat nearby in 2018, for €490,000, her section of the canal was pedestrianised and she noticed foot traffic in the neighbourhood — and the number of new local businesses — increase. These days, she says, she has lost count of the number of new bars and restaurants that have opened locally.

A café in Canal Saint-Martin. Many new eateries and other businesses have sprung up in the area in recent years © Hemis/Alamy 

Aside from the prices and the waterside location, another draw for her was the fact she was within walking distance of two green spaces. To the north is the nearly 25ha Parc des Buttes-Chaumont with its distinctive Temple de la Sybille, a Roman-style monument based on the ancient Vesta temple in Tivoli. The smaller Jardin Villemin to her south includes sports facilities, a bandstand and a playground. “In Paris, being this close to two green spaces is a real luxury,” she says.

Ciraolo enjoys the noise of conversation from the bar opposite her and she dismisses local grumbling that the neighbourhood has become too fashionable among the bobo class, a popular French term for affluent professionals with pretensions to bohemian values but who lead bourgeois lives.

“They shouldn’t forget the 10th is an active, thriving district. Some people tend to think they are in 16th and expect tranquillity: let them move,” she says, referring to the upmarket westerly district accommodating many of the city’s embassies and museums.

Rowe, who has visited the area since she moved to Paris from London in 2017, has noticed the change, too. “Today, sometimes as soon as I leave my building I’m hit by the crowds.”

But despite the tourists — and the white-knuckle ride of securing her mortgage — there is nowhere she would rather move, she says.

Picnics by the canalside are popular with locals and visitors alike © Hemis/Alamy

Originally from the UK, she travels back to London seven or eight times a year via the Eurostar, which departs from Gare du Nord, a 15-minute walk from her home. With the area’s good connections — Gare du Nord, Gare de L’Est and République lie on several Metro lines — it also appeals to her friends.

When we speak in May, she has recently hosted a midweek evening picnic for eight, gathering on the grass next to the canal in front of her new apartment. The group has assembled from across the city — some arriving by bike or moped, others via Metro — for an archetypal French spread: two bottles of rosé and some Kronenbourg 1664, filling baguettes with cheese and saucisson purchased from a local shop.

“It sounds like a cliché but it’s a cliché for a reason, this is one of the best picnic spots in Paris,” she says.

At a glance

  • In June, the average list price for an apartment in Paris was €10,081 per sq m (Meilleurs Agents).

  • Trains connect Gare du Nord with the business district of La Défense in 15 minutes. 

  • Trains from London to Paris take less than 2 hours 30 minutes; flights from New York take less than eight hours.

What you can buy . . . 

Apartment, 10th arrondissement, €730,000

A two-bedroom, 73 sq m apartment on the third floor of a 1914 building with a lift, to the west of Canal Saint-Martin. A short walk to Louis Blanc Metro station, the apartment has parquet flooring and a communal cellar. For sale with Engel & Völkers.

Apartment, 10th arrondissement, €910,000

A one-bedroom apartment overlooking the canal. The flat is on the second floor of a condominium with a caretaker and a lift, and comes with a parking space. It is a five-minute walk from Gare de l’Est. For sale with Barnes International Realty.

Apartment, 10th arrondissement, €1.74mn

A three-bedroom, three-bathroom apartment on the cobbled Passage du Désir, a short walk to the west of the canal. The third-floor flat measures 145 sq m and features an open-plan kitchen and living area. Bedrooms overlook an internal courtyard. With Engel & Völkers.

Find out about our latest stories first — follow @FTProperty on Twitter or @ft_houseandhome on Instagram

Source: ft.com

Apache is functioning normally

Most borrowers who had a mortgage forbearance in March 2021, including disproportionately impacted borrowers of color, were either current or closed as of March 2023. This is according to data released this week by the Consumer Financial Protection Bureau (CFPB) Office of Research.

In the immediate aftermath of the COVID-19 coronavirus pandemic’s onset, the Coronavirus Aid, Relief, and Economic Security (CARES) Act passed in March 2020 allowed millions of U.S. mortgage borrowers to enter public or private forbearance programs, which temporarily paused their mortgage payments.

Recent data from the national mortgage database compares the performance of mortgage borrowers in March 2023 to borrowers in March 2021 who had COVID-related forbearance, were delinquent but not in forbearance, and those considered current on their payments. Over the past two years, the CFPB has been vocal about its concerns regarding forbearance recovery, but the data shows generally positive outcomes.

“While we expressed concern in both 2021 and 2022 about borrowers’ ability to recover from periods of forbearance, our most recent analysis shows that the majority of borrowers in forbearance in 2021 – including Black and Hispanic borrowers – were largely able to become current on their payments by March 2023,” the report said.

In 2021, CFPB found that mortgage delinquencies were most common among Black or Hispanic borrowers; loans with a loan-to-value ratio of 60% or higher; borrowers living in majority-minority census tracts; and borrowers living in census tracts with lower relative incomes.

“[M]ortgages that were in forbearance in March 2021 are performing much better than loans that were 60 days or more delinquent in March 2021,” the CFPB found. “They’re performing, however, slightly worse than loans that were current in March 2021. Loans in forbearance in March 2021 were also less likely to be closed by March 2023 versus loans that were delinquent or current in March 2021.”

Among loans in forbearance in March 2021, more than 52% were current as of March 2023, a larger share than the 26% of loans that were 60 days or more delinquent two years prior. Generally, the positive outcomes are clear, the Bureau said.

“[T]he majority of borrowers, including Black and Hispanic borrowers, who had a mortgage forbearance in March 2021 were current as of March 2023,” the data said. “We also showed that borrowers in forbearance in March 2021 had a much lower likelihood of being delinquent or in foreclosure compared to borrowers who were 60 days or more delinquent in March 2021.”

Related research on CARES Act forbearances has illustrated that most borrowers became current either by self-curing or curing with assistance, including entering into a repayment plan, deferral or loan modification.

“The CFPB will continue to monitor how mortgage borrowers are faring as the economic recovery from the COVID-19 pandemic moves forward,” the report said.

Source: housingwire.com

Apache is functioning normally

Some people never take control of their finances because they’re afraid that doing so would require them to give up everything they enjoy. I don’t believe that’s true. Getting out of debt requires hard work and sacrifice, but that doesn’t mean you can’t have fun along the way.

Aaron recently sent the following e-mail:

You paid off $35,000 in debt in just over three years. Does that mean you were balls-to-the-wall dedicated and had no frills and were dour-faced the whole time? Were you using every spare penny to pay debt? Did you give up all luxuries and all fun? Did paying off the debt consume you?

That’s my greatest fear about the whole thing. What makes it worse is that I’m serious about getting out of debt — I just don’t want to be miserable in the process. Especially since I’m going to be married soon.

Any encouragement you can give would be greatly appreciated.

When a person decides to make a lifestyle change — financial or otherwise — there’s a temptation GO ALL OUT. With the zeal of a new convert, you leap headlong into a life of thrift, for example, giving up everything you valued before.

There’s a problem with this.

Most people who leap from a lifestyle of deficit-spending to one of extreme frugality find the waters very, very cold. It’s a shock to the system. It feels oppressive. They struggle to stay afloat, but before long decide they’re going to sink rather than swim, so return to the warmer, familiar waters, the waters of debt.

I made several false starts before I found my way. I would decide to give up comics completely, or to never buy another computer game. These sorts of goals are foolish. Nobody has that kind of god-like self-control. Everyone needs an indulgence now and then.

Rather than quit cold turkey, I think the best way to begin a life of frugality is by taking small steps. Small steps eventually become big strides, but only after you’ve developed your frugal muscles.

Testing the Water

When I was working to pay off my debt, I was not obsessed. I did not give up all luxuries and fun. I was dedicated, yes, but debt reduction did not consume me. For much of those three years, I was struggling to figure things out. I didn’t suddenly move from clueless spender to clued-in saver. It was a gradual process, one that’s not even wholly complete today.

I started to focus on debt reduction in October 2004. In January 2006, over a year into my quest, I had one of my worst financial months ever. I spent over $1,000 on comic books. (I was buying expensive hard-bound compilations.) I’m almost ashamed to admit that, but it’s true: for that month, I spent more than I earned.

That’s an extreme example, though. Most months I made smart decisions with money, and gradually improved my situation. Measures that seemed extreme at the beginning became much easier by the end. When I started to get out of debt, I thought of cable television as a Need. By the end of the process, I saw that it was a Want. That’s just one example; I cut back in many areas. But again, these changes did not occur overnight.

Finding Balance

For some people, the gazelle-like intensity espoused by Dave Ramsey is absolutely the right way to go. But I believe that the people who succeed with this sort of devotion are those who actually learn to enjoy extreme frugality. They don’t feel like they’re making sacrifices. The rest of us need some sort of balance.

In my case, my most austere period came after I had re-paid my debt. When I quit my job at the box factory last spring, I spent a few months being too frugal, and I was not happy. It was then that I discovered the balanced money formula, which I’ve mentioned frequently over the past few months. Adopting this technique helped me to continue saving while also allowing room for fun. The same thing can be done while you repay your debt.

Yes, you should cut back as much as possible. Yes, thrift and frugality are important tools to meeting your financial goals. But I believe it’s important to develop sustainable financial goals. If you’re miserable, or if you cut your spending so far that you cannot maintain it, there’s a risk that you’ll lapse back into old habits.

There’s no one right path to debt-free living. Each of us has different priorities. To find the way that’s right for you, you need to set financial goals, draft a spending plan that moves you in the direction of these goals, and then practice patient persistence. And let yourself have a treat now and then.

Source: getrichslowly.org

Apache is functioning normally

For many individuals and families, owning a home is a lifelong dream. However, with rising real estate prices, some may find themselves seeking financing beyond the conforming loan limit. This is where jumbo loans come into play.

What is a jumbo loan?

A jumbo loan in Alaska is a type of mortgage that enables homebuyers to borrow more than the limits set by the Federal Housing Finance Agency (FHFA) for conforming loans. The conforming loan limit (CLL) is the maximum amount of money that a lender will provide to borrowers at a specific interest rate and is established each year. Jumbo loans are necessary for homebuyers who want to purchase a high-value property, such as a luxury home, that exceeds the conforming loan limit. 

If you’re considering purchasing a home that requires financing beyond the CLL, then you’ll need to apply for a jumbo loan. But because of the larger loan amounts and increased risk for lenders, Alaska jumbo loans often come with higher interest rates and stricter requirements than conventional loans. For instance, a larger down payment and a higher credit score may be required to qualify for a jumbo loan.

What is the jumbo loan limit in Alaska?

In Alaska, the conforming loan limit is $1,089,300 across all counties. For example, if you’re buying a home in Anchorage Municipality, where the median sale price is $400,000, a loan limit exceeding $1,089,300 would be considered a jumbo loan.

Keep in mind that the loan amount is what determines whether or not you’ll need a jumbo loan, not the price of the home. So, if you were to put $200,000 down on a $1,200,000 home in Anchorage, the mortgage would be $1,000,000, which is under the conforming loan limit for this area. In this case, your loan wouldn’t be considered a jumbo loan.

For more information on the conforming loan limit in your county, use the FHFA map.

What are the requirements for a jumbo loan in Alaska?

The requirements to qualify for a jumbo loan are more stringent than the requirements for a conforming loan. Each lender may have different requirements or processes, but below are the typical requirements for borrowers seeking a jumbo loan.

Higher credit score: When it comes to receiving a jumbo loan in Alaska, credit score requirements are typically more stringent than for conventional mortgages. It’s possible that some lenders may accept a lower score, a credit score of at least 720 is generally required to qualify for a jumbo loan. It’s important to have a strong credit profile and a solid financial history to increase your chances of being approved for a jumbo loan.

Larger down payment: Jumbo loans are a popular financing option for homebuyers looking to buy higher-priced homes. However, compared to traditional mortgages, jumbo loans typically require a larger down payment. The exact amount required will vary depending on the lender and the borrower’s finances, but down payment requirements for jumbo loans can be as high as 20%, sometimes 30%. It’s worth noting that putting down a larger sum upfront can often help borrowers secure a better interest rate on their jumbo loan.

More assets: Jumbo loan lenders generally require borrowers to demonstrate a strong financial profile, including substantial liquid assets or savings. To qualify for a jumbo loan, borrowers must have enough reserves to cover at least one year of mortgage payments. This requirement ensures that borrowers have the financial flexibility to meet their loan obligations in the event of a financial hardship.

Lower debt-to-income ratio (DTI): Whether you’re applying for a traditional mortgage or a jumbo loan, lenders evaluate your spending habits and creditworthiness by analyzing your debt-to-income ratio (DTI). The DTI is determined by dividing the total of your monthly debt payments by your gross monthly income. While some lenders may accept a DTI as high as 50% for a conforming loan, those applying for a jumbo loan should aim for a DTI under 43% and ideally closer to 36%.

Additional home appraisals: Mortgage lenders may require a second home appraisal as an extra layer of protection when it comes to jumbo loans. The second appraisal serves as an additional opinion to ensure the property’s value aligns with the loan amount. In areas with limited comparable property sales, this extra appraisal may cost more than in neighborhoods with more frequent sales.

Source: redfin.com

Apache is functioning normally

So you want to build a new home — but you’ve got sticker shock. In researching cost-effective options, you may have discovered modular and manufactured homes.

These home types are typically more affordable than traditional new construction, known as “site-built” homes. The Manufactured Housing Institute reports that a manufactured home costs half as much per square foot as a site-built home. For modular builds, a 2017 study by the Terner Center for Housing Innovation at the University of California, Berkeley estimates construction savings of at least 20%.

Depending on land costs and the model you choose, a new manufactured or modular build might even cost less than the average existing home.

Modular and manufactured homes are both types of prefabricated, or “prefab,” homes. That means they’re built indoors at a factory, then transported to the building site. But just because they both start out in a factory doesn’t mean they’re the same thing.

Let’s explore the differences between these two home types.

Definitions: Modular vs. manufactured homes

What is a modular home?

A modular home is factory-built in large, three-dimensional pieces known as modules. When the modules leave the factory, they are up to 90% complete. The finishing touches happen at the building site, where the modules are attached to a permanent foundation and each other. Then, the finished home is inspected to ensure it meets local building codes.

What is a manufactured home?

A manufactured home is what you might think of when you hear the term “mobile home” or “trailer.” However, that terminology is considered outdated. Today’s manufactured homes come in a wide range of designs and styles.

Like modular homes, manufactured homes are built in factories. Depending on their size, they are transported to the building site in one piece, known as a single-wide, or several pieces, known as a double- or triple-wide.

Unlike modular homes, manufactured homes are attached to a permanent chassis. This is a metal frame that can be attached to wheels; that’s where the term “mobile home” comes from. The chassis cannot be removed, but you can remove or cover up the wheels.

Manufactured homes are built to national building standards set by the U.S. Department of Housing and Urban Development (HUD), called the HUD Code.

Did you know…

Technically, the term “mobile home” only applies to factory-constructed homes built prior to June 15, 1976. That’s when the HUD Code went into effect. The HUD Code set federal standards for safety and durability of manufactured homes.

Pros, cons and differences

Compared to new site-built construction, modular and manufactured homes are a more affordable path to homeownership. Here are some things to consider when deciding between the two:

  • Cost and resale value: A manufactured home typically costs less than a modular home. While manufactured homes have come a long way in terms of quality, they still can depreciate in value over time, similar to an automobile. Modular homes generally change in value with the market similar to site-built homes.

  • Building codes: Manufactured homes are built to the HUD Code. Modular homes follow the same state and local building codes as site-built houses.

  • Size and durability: Available sizes vary, although modular homes offer more ability to customize layouts. Manufactured homes don’t hold up as well in high winds or hurricanes compared to modular homes. 

  • Portability: Manufactured homes must be affixed to a steel chassis. Depending on their size, they can be built and transported in full from the factory. Modular homes do not have a chassis. They are built in pieces, transported and assembled on-site.

  • Construction efficiency: Modular and manufactured homes share some advantages over site-built homes. Indoor construction pretty much eliminates weather delays. Assembly-line construction is also faster and cheaper. Less construction waste saves home buyers money, and with efficiency gains, you’ll likely move in sooner.

Loans and financing

Modular homes

While a modular home is being built, you might have to make up-front or installment payments to the builder. These can be paid in cash or through a construction loan. Once construction is complete on a modular home, it can be financed with a traditional mortgage — just like a site-built home.

Manufactured homes

Manufactured homes are not always eligible for traditional mortgages. Here are some options:

  • Traditional mortgages: To qualify for a mortgage, you must own the underlying land and have the manufactured home titled as real property. 

  • FHA Title 1 loans: If your home doesn’t qualify for a mortgage, the Federal Housing Administration (FHA) offers Title 1 loans to finance manufactured homes. With an FHA Title 1 loan, the buyer is permitted to lease the land where the home resides, such as in a manufactured home community — sometimes called a mobile home park.

  • Chattel loans: Often, buyers finance manufactured homes using chattel loans. A chattel loan is a direct form of financing for personal property, similar to an auto loan. However, these loans typically have higher interest rates than traditional mortgages. The Consumer Financial Protection Bureau reports that around 42% of manufactured home owners use a chattel loan to finance their purchase.

Summary: Key differences

Manufactured home

Modular home

Site-built home

Cost to build

Type of foundation

Semipermanent (e.g. pier and ground anchors) or permanent.

Permanent.

Permanent.

Portability

Yes. (Has a chassis that can be attached to wheels to move the home.)

No. (Once modules are delivered, they are permanently attached to each other and the foundation.)

No. (Built entirely on-site.)

Building code

International Residential Code (local building codes).

International Residential Code (local building codes).

Options to customize

Durability

Financing (after construction)

Chattel loan, FHA Title 1 loan or traditional mortgage.

Traditional mortgage.

Traditional mortgage.

Value over time

Typically decreases.

Typically increases.

Typically increases.

Modular vs. manufactured: Which is right for me?

A manufactured home is less expensive and can get you to your goal of homeownership sooner, especially if you live in a rural area where affordable housing is scarce. Citing January 2023 data, the U.S. Census Bureau reports that the average cost of a new manufactured home is $126,100. However, future home equity is less predictable for manufactured homes. Typically, their value depreciates over time. But it also could hold steady, depending on your local real estate market. Other factors, such as if you own the land underneath — and how you landscape it — affect long-term value, too.

A modular home is a larger up-front investment, but the home value typically grows over time, like that of a site-built home. Modular construction is sturdier than that of manufactured homes, too. If you finance a modular home using a construction loan, you might need a higher credit score and lower debt-to-income ratio to qualify, compared to credit score requirements to buy an existing home. That’s because you don’t have a finished home to use as collateral, like you can in a traditional mortgage.

Alternatives to modular and manufactured homes

If you’re looking for an affordable path to homeownership, here are other options to consider:

  • Townhouses or condominiums: If you don’t mind sharing walls with your neighbors, buying a townhouse or condo can help you build equity at an affordable price point. You might have to pay homeowners association fees, though, so account for that when budgeting.

  • Site-built homes: If you’re committed to a new build, you’ll pay more per square foot for traditional construction compared to a modular or manufactured home. However, you can cut costs by building a smaller home and opting for modest finishes.

  • Tiny houses: Sized around 400 square feet or less, tiny houses can be set on wheels or a permanent foundation. Minimalist living is a lifestyle shift, so consider the pros and cons before you downsize.

Source: nerdwallet.com