Mortgage Options for Luxury Properties

by Team Murphy 01/08/2020

Photo by Vincent Rivaud from Pexels

When you buy a luxury home, you have several options when it comes to paying for the home. While some luxury buyers invest fully in the home and purchase outright, most find that opting for a mortgage of some type keeps options open and reserves capital for other things. Mortgages can be used for high end homes, but not all products are available -- or useful -- for this luxury space. Whether you are buying or selling, knowing what to expect when it comes to financing can help you strike the perfect deal. 

 Conventional Mortgages

Depending on where you live and the cost of the high end home, a conventional mortgage could be all you need. In parts of the country where a huge home in pristine condition still falls within the guidelines of a complying mortgage, this may be your best option. While it may not always work for you, exploring the conventional financing options is an ideal first step. 

Conventional loans are conforming loans – that fall within a specific set of guidelines. You can use a conventional loan for your own residence or for a vacation or investment home. Opting for this type of mortgage could result in lower costs to you (if you have at least 20% equity, you can avoid PMI). If the mortgage for your prospective home is under the limit of $453,100, then you can choose a conventional loan for your home.

That $453,100 limit is for mortgages in most areas, but a few select zip codes in the US allow for an even larger limit. In these high end locations, the limit for a conventional loan is much higher: $679,650. These limits are not the cost of the home itself, but the amount that you can borrow and still qualify for the conventional, conforming loan.

Jumbo Loans

When a conventional loan isn't quite right, or the loan amount for the home in question is over the stated conventional limits of $453 or $679K, then a jumbo loan will work best. These loans are designed for expensive, high end homes and properties and may have more stringent requirements when it comes to down payment amounts and the assets that need to remain on hand after the home purchase.

Aside from the differences in the amount of the loan, a jumbo loan works in a way that is very similar to a conventional loan. Expect to go through an underwriting process, to supply proof of income and to shop around for the best possible rates when you choose this option. 

No matter what product you choose, expect a luxury home mortgage to follow similar steps to a conventional one. Depending on the amount borrowed and the buyer's financial health, the process could take less time than a conventional one. 

About the Author
Author

Team Murphy

Both Dan and Patty both were born in Western New York and lived in the Finger Lakes region where they raised two daughters. Dan graduated from Rochester Institute of Technology with a degree in criminal justice. Patty attended SUNY Geneseo majoring in design. With a background in Landscape Design she opened a small landscaping company “Garden’s by Patty” and ran her own greenhouse.

This dynamic duo moved to Lake Mary, Florida in 2007, eventually to Palm Coast in 2009. Patty got her license early in 2014 and hit the ground running. Through her desire to gain as much knowledge in real estate she has earned three designations to aid her in helping her customers receive the very best service possible. Seller’s Representative Specialist (SRS), Accredited Buyer’s Representative (ABR)and Senior Real Estate Specialist (SRES).

Dan continued to work for Allstate on the National Catastrophe Team until 2018, after 34 years with the company he retired to start an exciting new career with Patty in the real estate world. He Completed his pre-licensing course and post license course in record time with flying colors. His enthusiasm for the business is refreshing. He’s a natural.

In March of 2019 they officially became “Team Murphy”. Combining their skills to become an outstanding, hardworking, professional real estate force. Their number ONE goal is to build strong, lasting relationships with their customers.

“We live in this community, and we want to know that when we see a past customer in Publix, at dinner out, or at the beach, that they will be happy to see us! We treat each customer the way we want to be treated. It’s just that simple”.