Jumbo loans is a type of mortgage program you want to consider if you want to purchase a high-value property. This type of mortgage has been designed if the mortgage you are looking for is greater than the limit that has been set by Freddie Mac and Fannie Mae, which are the government-sponsored (quasi) giants that purchase the majority of home loans in the United States and package them for investors. If you are purchasing a large property or a home in a prestigious area, this is the type of mortgage you are probably going to need.
Understanding Jumbo Loans
As the name indicates, a jumbo mortgage is one that covers a loan amount that is larger than normal. This sort of product is usually used for vacation homes, investment properties, and primary homes. The maximum size of a jumbo will vary depending on the mortgage lender and the location. Qualifying guidelines differ as well. As the market for jumbo loans is smaller when compared with the market for conforming loans, you may need to shop around a bit in order to find the best mortgage for you. It is also worth pointing out that rates differ as well.
Aside from these distinctions, jumbo loans do not differ much when compared with conventional mortgages. Details such as payment schedules tend to be the same. Borrowers should be able to get an adjustable-rate or fixed-rate jumbo mortgage, with different terms available.
The main advantage of going down this route is that you are going to be able to borrow more than you would if you went for a traditional mortgage. For example, if you want to purchase a property worth $1.8 million and you need to borrow $1.2 million, a jumbo loan mortgage could make this possible so long as you qualify.
A lot of people prefer to use a mortgage to finance a property rather than tying up all of their money, and so a jumbo becomes an obvious solution in situations like this.
Do You Need One?
You need to know the conforming limit for your location to determine whether or not a jumbo loan is going to be required. If you wish to borrow in excess of the loan limit for your location, a jumbo will be needed. For 2022, most of the country has a conforming limit of up to $647,200 and for 2023 is $726,200. Nevertheless, in expensive areas, the limits can be higher. For example, the conforming limit in 2022 for many areas in New York and California is $970,800. The same applies to most of Hawaii, Alaska, and Washington, D.C. Just make sure to know what the limit for jumbo loans is.
Qualifying For a Loan
You may be wondering whether or not you qualify for a jumbo loan. As indicated, it is going to differ from lender to lender. However, it can often be more difficult to qualify for a jumbo because you are borrowing more money. Some of the things that may be expected of you include heftier reserves or liquid assets, a higher credit score, and a large income requirement. The best thing to do is speak with MortgageQuote.com if you are considering finding out what the lender would expect from you in order to be accepted so that you can have a realistic understanding before you make your application.
What Are Jumbo Loan Rates?
The rates on jumbo loan rates do fluctuate, so it is impossible to give you a specific answer to this question. They can be lower or higher than conforming mortgage rates. Whenever you look for the current jumbo loan rate, it is imperative to make sure you use a credible and reliable source for this information.
We hope that this has helped you to get a better understanding of what a jumbo loan is and whether or not this is the sort of product that you are going to need. If you need to borrow in excess of the conforming loan limit for the area in question, a jumbo loan is a natural solution. As there are different lenders providing this product, it does make sense to assess your options carefully when looking for the right jumbo loan for you.