Not all of the usual rules of financing apply when it comes to luxury buyers. They tend to be busy people with complex financial portfolios and their reasons for buying real estate may go beyond just acquiring a place to live. All of this can enter into how to approach the financing process, according to Guaranteed Rate Division Sales Manager Jim Eboli.
“People in the jumbo space don’t often fit a conventional box,” Eboli said. “Maybe they own their own business or have just sold their company and are dealing with large assets. Both of those instances are not eligible for delivery to Freddie Mac or Fannie Mae, so you may need to look at an asset depletion program to qualify them for a loan.”
It’s nuances like these that make it extra important to be well-versed in guidelines and regulations, Eboli said. The finances of buyers at the luxury level are often complicated, and that complication can make it harder to find loan options that work for them, even if they have a healthy balance sheet.
“You need to know how to navigate the waters and have the guidelines memorized so you can educate luxury home buyers,” Eboli said. He added that strong financials and a complicated portfolio don’t automatically mean luxury buyers understand the regulations and standards to which their transactions will be subject. “Don’t make assumptions that the borrower won’t need to be educated just because they may have other properties or are putting down a sizeable down payment. You may have to educate them and dedicate just as much time and attention to them as you would a first-time homebuyer.”
A central goal should be to make the process as simple and efficient as possible for buyers, Eboli said. These types of buyers are often busy and, while they may be in excellent financial health, one thing nobody can buy is time. “These transactions are complicated and unique, and it really is in the best interest of the customer to be provided with options,” he said.
Eboli warned that not every loan officer is necessarily up to the task of arranging a high-end loan. Agents who take care to connect wealthy buyers with mortgage professionals who are proven jumbo loan specialists will likely reap the rewards later, he said: “When that client then realizes the benefits and has an overall great experience, it adds a whole other layer of credibility to the relationship.”