The median price for a Santa Barbara home has been well over $500,000 for quite some time, surpassing the $800,000 mark in 2003, and the $1 million mark in 2004. These price points are significant in way of jumbo loan financing. In 2008 the conforming loan limit for Santa Barbara County went from $417,000 to $729,750, with a lowering to its current level of $625,500 in 2011. As a result today’s loans above $625,500 involve non-conforming jumbo loan financing.
Buyers have traditionally paid more for jumbo non-conforming loans because they’re harder to sell on the secondary market to investors, but in 2013 the tables turned due to banks having more deposits than loans. Supply and demand certainly lowered the cost of borrowing more money. At the same time, in an effort to scale down on conforming loans backed by Fannie Mae and Freddie Mac federal officials have been raising fees (known as “g-fees” or “guarantee fees”) charged to lenders. As a result today’s non-conforming jumbo loans are averaging about .25 percentage points less than smaller amount conforming loans. By contrast in 2008 non-conforming jumbo loans were costing consumers 1.8 percentage points more!
Today’s lending environment bodes well for more expensive Santa Barbara real estate, with lower interest rates in place at the higher loan amounts. Tougher qualifying standards also enter into this equation, so taking care to choose a seasoned loan agent who can help you though the process is all important. I’m happy to refer you to some of Santa Barbara’s finest lenders upon request. I look forward to your inquiries and to assisting you in getting the best terms and price for your home in paradise.