Tiger Woods' new $54 million commitment -- to his mortgage

Tiger Woods' new $54 million commitment - to his mortgage!Many have speculated that Tiger Woods has a tough time keeping his commitments. But someone seems to think his word is worth something -- his banker.

Today, reports surfaced that Woods signed on to a $54 million mortgage on his in-progress Jupiter Island, Florida mansion/compound. Reportedly, Woods is listed on the real estate documents as a single man, which means the home loan must have closed within the last week, as his divorce was just finalized on August 23.

Speculation abounds, as typical with all things Tiger, that the new mortgage may indicate a cash flow crisis. From a real estate perspective, though, it may simply be an astute business move to finance the home and its completion, while mortgage money is so cheap, rather than to make that size of cash outlay while, ahem, so much other cash is exiting Tiger's treasure chest.

The average American home buyer might wonder what it takes to get a $54 million loan, when it seems like a struggle for so many to qualify for loans a fraction of that size. You might have heard of a jumbo loan: loans above $417,000 are currently designated as beyond the conforming loan limit, which earns them the title of jumbo loan and the dubious distinction of slightly higher interest rates. When loans get above $1-$1.5 million, though, they fall into the category of Super-Jumbo Loans.

Interest rates on jumbo loans generally run about one-half percentage point higher than conforming loan rates; by contrast, rates on Super-Jumbo Loans can run as much as two full percentage points higher than conforming loans, to compensate the lender for the super-jumbo risk they're taking by extending that much cash. Similarly, loan-to-value ratios are much lower when you get into this lending echelon; rather than the 96.5% maximum loan-to-value ratio of an FHA loan, or even the more conservative 80% LTV of a conventional loan with A+ interest rates, Super-Jumbo loans like Tiger's often max out at a 40% or 50% ratio of the amount the bank will lend, compared with what the lender believes the home to be worth.

By those guidelines, that would mean Tiger's lender thinks his home, when finished, will be worth somewhere around $100 million.

Of course, this mortgage means that the bank also thinks Tiger's career still has legs; there are some private lenders who will make a Super-Jumbo loan as high as 95% LTV with a pledge against Tiger's income and earnings.

But get this -- some rough-and-dirty math projects that the mortgage payment on $54 million is right around $300,000 -- per month! When your own monthly bills seem like they're getting out of hand, remember that, and put them right back into perspective.
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