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High Balance Loan

Posted on September 24, 2016 by Deana Manzanares (NMLS #1286808).

Structure and Strategy

Are you looking for a low rate?  Are you purchasing a home above $417,000? What are the conforming loan limits in the Denver Metro area?  How much do you have to put down?  Do you have to put 20% Down?  All of these are really good questions and are what we answer on a daily basis.

Let’s say you are wanting to purchase a $500,000 home and want to only put 10% down. Maybe because that is the available funds you have to put down or maybe it’s because you don’t want to exhaust all you have in savings.  Either way, if this is your desire and you want to know how this will affect your loan options here is an example of what might ultimately help you decide.  This is where again, structure and strategy are necessary.

When you are purchasing above the conforming loan limits, which recently increased from $417,000 to 458,850 in the Denver Metro area. At this level, it is now considered a high balance conforming loan. Because you are above the national conforming loan limit ($417k), you will get hit with a rate adjustment, from Fannie Mae/Freddie Mac, that will put you at a higher rate.

This is not advertised so when you are seeing rates online they do not reflect this adjustment, which can be very misconceiving.  The best way to avoid this rate impact is to discuss and figure out the best structure and strategy necessary.  We always recommend discussing this with a lender and see what alternative options may be available and look at what would be best for your financial strategy.  Give us a call if you would like to discuss.

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