Jumbo Home Loans

 

Program Overview

Jumbo loans, as indicated by their name, are larger than conventional mortgages and classified as non-conforming.  The reason for the distinction, aside from their cost, is their underwriting guidelines.

For some jumbo loans, the underwriting process might require getting more than one appraisal to verify the actual value of the property.  And the borrower may have to undergo even more financial investigation and submit more paperwork than normal to be approved.  But, unlike some other non-conforming loans, jumbo loans do not deal with the borrower’s past credit problems, but rather the size of loan.

Because jumbo loans are for more money than the average price of a home, they carry more risk for lenders.  To offset this risk, lenders who offer jumbo loans often charge a higher interest rate and may require a larger down payment than a conventional mortgage.

And since fewer home buyers can afford homes valued at over $417,000, the market for jumbo loans is not as broad as it is for conventional loans.  That makes the prospect a riskier endeavor for lenders, which is reflected in the interest rate and terms of the mortgage.

Alternative Options

The simplest option by far is to increase the amount of your down payment so that your final loan amount is below the conforming loan limit of $417,000.  This could be especially helpful to you if the mortgage you are considering is only slightly above the conforming loan limit.

The more complex option would be to obtain a second mortgage.  This entails taking out a second, smaller mortgage at the same time as the first.  By doing this, your first, larger mortgage would conform to the loan limit, and you may avoid some of the increased requirements and higher rates of a jumbo.

However, the interest rate on a second mortgage is typically higher than on a first mortgage, so you’ll want to calculate the costs and potential savings carefully.  In addition, if you took out two mortgages, you would be responsible for paying both of them each month.

So you would need to be sure that you could manage the combined payment. Not everyone will be eligible or qualify for this loan option.

Have Additional Questions?

If you have additional questions about getting mortgage help, we are available 24/7 to answer any questions you have about the Jumbo Loan program. Give us a call at (920) 623-4902.

We can will help you understand your options, design a plan to suit your individual situation and prepare your application.

 

Get Pre-Approved Today!