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Chris Salese

In early August 1986, there was a catchy song released by Lionel Richie that was titled “Dancing on the Ceiling.”

I’m pretty sure, regardless of your age, there’s a good chance you’ve probably heard this song at least once over the years either on the radio, at a wedding or during a karaoke marathon.

While it doesn’t matter when or where you did, the song just has a way of sticking with you. Lyric interpretation aside, I also thought the title of the song provided the best visual for where we are today with two specific loan products.

The first one is what’s called a fixed-rate second mortgage, when the term and the rate of the loan are fixed for five, 10, 15 or 20 years.

This is different than a home equity line of credit, where the rate is usually variable.

However, another one of the main differences between them is the ability for the fixed rate second mortgage investors to allow financing up to 100 percent of the value of your home whereas most home equity line of credit investors stay around 90 percent financing or less.

Therefore, with great credit scores of 740 or higher, you can certainly dance on the loan ceiling with this fixed-rate second mortgage product.

The other product is a jumbo loan program up to 95 percent financing. That’s right, you are not stuck at, let’s say, a $679,650 conventional loan amount in Napa County if you only have 5 percent for your down payment.

Under this jumbo program, you can borrow up to a $2 million loan amount with as little as a 5 percent down payment for the purchase of your home.

In fact, you may find a few lenders who will even go slightly higher loan amount-wise in this scenario.

But, of course, there are a couple of major qualification guidelines that you need to dance around to take advantage of this loan program.

Although if your application is strong enough, they shouldn’t be that difficult for you to overcome. You will need excellent credit scores, 740 or above, a low debt-to -income ratio and plenty of reserves.

As a reward, these types of jumbo loan programs typically come with no mortgage insurance requirement despite their high loan to value ratio capacity.

In addition, you can select an interest only payment feature if that makes sense for your mortgage financing plan.

As Lionel Richie might say, “Hello, are these the loan programs you’re looking for?”

Well, I think the mortgage industry has been busy lately dusting off the album covers of their own favorite power ballads.

For the first time in many years, lenders are happily staring at a product menu that continues to grow and become deeper each month.

The industry hasn’t adjusted this quickly since before the financial markets collapsed about 10 years ago.

Let’s hope that the interpretation of the mortgage industry’s efforts to further develop their loan product menu this time around, doesn’t lead to the same result as the last time.

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Chris Salese can be reached at chris@delsurmortgage.com or 707-363-4439. He is a licensed California mortgage lender (LO NMLS #254469 — CA-DBO #254469 Corp NMLS #1169 Equal Housing Lender.

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