Clearwater Beach Florida – As most of our readers know we work hard to get great deals for our Clearwater Beach condo buyers unfortunately there are some great buys on luxury condos in Clearwater however one of the major roadblocks  interested buyers encounter is the fact that in the Clearwater Beach Florida / Sand Key Florida area the allowable Fannie Mae loan limit for conventional loans is only $417,000 with at least 20% down.

Now I would agree that in most areas of Clearwater real estate – this would be plenty, however, when you consider we’re home to some of the best beaches in the United States, it’s not nearly enough if you want to buy a typical beach condo and are looking for a reasonable loan.

Even if you were planning on buying a condo and putting 20% to 25% down it’s a problem because most Clearwater Beach Florida oceanfront 3 bedroom condominiums are still selling from $800,000 to well over $1 million dollars even in today’s real estate market.

Related article: 

Clearwater Beach FL Jumbo Borrowers Squeezed and so are Sellers

So what does this mean for the Sellers with Clearwater beach condos they are looking to sell?

In my experience…

1) Clearwater Beach low conventional loan limits are causing a lot of mortgage pressure to purchase properties for $520,000 (or less)  give or take so a buyer can buy a condo with a loan of less than $417,000.

2) Clearwater Jumbo rates (and terms) further limits the number of ready and willing buyers in this “jumbo” price point – so with less willing and able buyers there is again more pressure on sellers to make a deal with the remaining buyers – and we’re seeing cash is king. Our last two beach condo buyers paid cash for their gulf beachfront condos.

What’s hard to believe is we are currently working with many buyers who are the best clients a mortgage lender could want (excellent credit, no debt, no issue with income qualifications) and yet they are not willing to buy a second home / vacation home under the recent terms one National bank / lender gave … For Jumbo loans on beach condo purchases needing a loan over $417K but under 1 million they didn’t even offer a fixed rate loan only a 5/1 ARM at  5.75% with a 1% point so basically when conventional home buyers are getting mortgage rates under 5% – some of the best possible borrowers are being asked to pay a premium of almost 7% and up.

When I asked “why?”,  the banks told me that it’s because “Jumbo Loans” are currently the highest loans in default. Unfortunately, those I see in preforeclosure  and foreclosure on the beaches now are very different than the potential buyers we are seeing. We all know lending had loose guidelines back a few years and many real estate buyers got in way over their heads – these are not the buyers we are working with today.

77% Pending Sales of Clearwater Beach Condos and Sand Key Condos are NOT Jumbos

There are currently 22 Clearwater condos under contract and pending sale in the Tampa Bay MLS – of that 17 of them has a listed purchase price of under $420,000, 4 are in the $600K’s and one is pending at $849,000 (all of which could be lower on closing – we don’t know the negotiated purchase price at this point). It’s not surprising that it was recently reported that 50% of all real estate sales in Florida this year have been cash transactions.

In our experience, today’s Tampa mortgage rates for Jumbo Loans have caused several of our clients to scale back their Clearwater beach condo purchases and others have postponed them while they free up additional funds to make up the difference in purchase price and “conforming loans”.  We’ve seen several people who planned on buying beachfront condos for @$800,000 and now have scaled back $200-300K to qualify for the conforming loan rates and terms.

So if you are a seller on Clearwater Beach Florida today (or Sand Key, Island Estates and our Gulf beaches) the best thing that can happen for you right now is that Banks get bank into the Jumbo loan market and begin to offer more attractive Jumbo Loan rates and terms for these willing Clearwater Beach buyers. With rates where they are – if Jumbo’s loosen up many of our buyers tell us they would prefer a larger more expensive condo if there aren’t punitive lending terms for them.

Well there was some good news this week….

Clearwater Beach Real Estate gets some good Jumbo Loan news

Today I read an article that stated “that the hard-to-find jumbo loan may be making a comeback.  Bank of America is among the major banks rolling out jumbo mortgage programs and holding the loans in their own portfolios.

It will offer loans from $730,000 to $1.5 million with 30-year fixed rates under 6 percent; but borrowers must make a 20-percent downpayment, have good credit, provide proof of income, and hold six months’ of principal, interest, property tax and insurance payments in reserve.”

I know we are constantly working with  local bankers who offer in-house “portfolio loans” – we can only hope that other banks, both local and national, will follow Bank of America lead in the Jumbo loan market.  If you have questions and need a good local banker, give us a call and we can introduce you to several good lenders and we will continue to keep you posted on what’s happening on our beaches.

Clearwater Beach Real Estate – Selling or Buying – Waterfront Condos or Homes – We Can Help!

If you’ve been thinking about buying or selling a waterfront or oceanfront beach condo or house in the Clearwater St Peterburg Tampa Bay area…

Call Us Today at (727) 710-8036 to hear more about how we can help you!

Contact us for a FREE quote and to find out your Tampa Mortgage options and you can search all Tampa St Petersburg and Clearwater condos for sale right now..

Copyright © 2007-2009 Jack and Cyndee Haydon, Clearwater REALTORS and specializing in Clearwater Florida, Clearwater Beach Florida, and Pinellas County Waterfront homes and condos. Information is deemed reliable however it is not guaranteed and subject to change at any time.

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  1. Hey Cyndee! Terrific post. The anxiety Lenders are feeling over Jumbo lending is really causing some problems here in the Clearwater and other coastal regions in FL. Loosening up credit on these properties is the last – or one of the last – pieces in the puzzle here in order for our upper-end luxury properties to start moving.

  2. Pingback: Clearwater Beach Condo Update: Shortage of Jumbo Loan Options Hurting Buyers and Sellers | Florida Home Loan Report
  3. Cyndee, This is the first detailed article I have read about the problems with Jumbo Loans. They are killing the higher end market here as well. Thank you for sharing such great information to all home buyers and sellers, not just Clearwater Beach Florida!

  4. Kevin – thanks for sharing your expertise – it’s always nice to get your Florida Mortgage perspective.

    Diane – Glad to hear we’re not the only ones experiencing these challenges – maybe we can get lenders to notice – heard a local bank yesterday was offering a 30 year fixed at 5.5% on some $900,000 waterfront condos in Tierra Verde – we need more banks making offers like that to qualified borrowers – hope that’s a sign of things to come.

  5. The wide spread between Jumbos and conforming loans are killing us in Chicago too. 2 of my neighbors in our complex pulled there places off the market because they fall into the jumbo range with a 700k list price.

  6. Good post. Jumbo lending is a very dangerous thing that can take this crisis to a worst level here in FL.

  7. Hi Cyndee – Long time no speak:) Hope your Summer is going well! The Jumbo loan issue with condos is a real problem. In fact there are many loan programs that no longer exist for those wishing to purchase a condo. It is no wonder that the condo market remains a weaker segment of the market (at least in Massachusetts anyways).

  8. a thoughtful look at the jumbo market, and/or luxury market in today’s terms– interesting that prices have fallen to “pre-junk loan” days, if only the standards and rates were more reasonable based on the client credit and capability instead of type of loan…

  9. Hi Cyndee! I was doing a google search for “jumbo loans in Flroida” and you were #1 on page 1 on Google! That is great! But not the info I was looking for, LOL!

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