Avoiding A Fort Lauderdale Jumbo Mortgage

Currently the Conforming loan limit for Broward, Palm Beach, and Miami-Dade Counties is $417,000.   Well, technically it’s $423,750 but the higher rate isn’t worth the additional $6,750 you can borrower so for arguments sake let’s go with $417,000.  Anytime your loan is above $417,000 your loan will be considered a Jumbo Loan which normally comes with a higher interest rate, stricter guidelines, etc.

To avoid having to get a Jumbo Loan you can go with a 1st loan amount of $417,000 and take out a 2nd mortgage up to 80% Combined Loan to Value or 75% if it’s a condo.

For example, if you are buying a single family home in Fort Lauderdale for $700,000 you could get a Conforming 1st mortgage for $417,000(59.6% loan to value) and a 2nd mortgage for $143,000 for a total loan of $560,000 (20% down).

So what is the downside?  The only real downside is that your 2nd mortgage is a Home Equity Line of Credit that can adjust.  Your rate will depend on your credit score and loan to value but will be tied to Prime (3.25% right now) plus a margin and will be amortized over 120 months (10 years).  In the example above and with a middle credit score of 720 or higher your margin (which never changes) would be 1% for a total rate of 4.25%.