As housing market improves, jumbo mortgages return
(CBS News) LOS ANGELES - There are more signs that the housing market is picking up. The government reported Thursday that construction was up more than 12 percent last month. Now, jumbo mortgages are making a comeback.
Eric and Dorothy Pincus moved in two weeks ago. Their three-bedroom house in Los Angeles cost them $900,000. They took out a loan for about $700,000.
"It was certainly more complicated than I anticipated," said Eric. He added: "It was painful. There were a lot of times where we thought it just might not happen."
The Pincuses needed a jumbo loan, which is a loan generally greater than $417,000. They are common in expensive markets such as Los Angeles, Chicago and New York.
Jumbos usually make up about 25 percent of all new mortgages, but they fell to 4.3 percent after the housing bubble burst. They've climbed back to 11.3 percent last year. That's spurred sales of homes priced between $750,000 and $1 million. They're up 52 percent in the past year
"The banks put you through a thousand different hoops before they finally say, 'Hey here's your money,'" said mortgage broker Steve Maizes. According to him, lenders require at least 20 percent down and a credit score above 700 to get a jumbo loan.
"Two years ago, the banks were saying, 'No I'm not going to give you a loan even if you are Bill Gates,'" said Maizes. "Now if you are a decent hard-working person with income such as the Pincuses, 'We're gonna get you the loan,' but they're not going to make it easy for you."
The Pincuses say it was worth the pain. They plan to live here for the next 30 years
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