If you have found yourself with a jumbo mortgage loan, you may be looking for another solution. Before you run out and try to find something else, it is very important that you know where you are starting from. This is why you should get to know and understand what jumbo mortgage loans are and how they can affect you financially. Here is some information that everyone should know about jumbo mortgage loans:
A jumbo mortgage is so named because they have very large principal amounts attached to them. In general, any home loan that currently exceeds the maximum mortgage limit as set forth by the Government Sponsored Agencies commonly known as Fannie Mae and Freddie Mac, is a Jumbo mortgage.? In most areas, this is any home loan that currently has a principal balance in excess of $417,000 and over $625,000 in high-cost areas.? , On average, jumbo loans? are well over $750,000 or so. These principals can reach well into the millions and loans over $1.0 million have are referred to as Super-Jumbos as there is a change in underwriting and down payment requirement for loans exceeding that amount.
You Need a Down Payment
With a jumbo loan, you will find that mortgage insurance will not be available. Because of this, lenders will require a higher down payment. Where a typical mortgage may require a down payment of approximately 10%, a jumbo mortgage will require one that is 20%. However, if you do choose a mortgage like this, you will be able to get a lower interest rate in most cases.
Other Info About Interest
Speaking of interest, the rates for jumbo mortgage follow the market, just like traditional loans. However, because the Federal Reserve is not participating in the purchase of Jumbo mortgage backed securities, the fixed rate jumbo loans will carry an interest premium over agency backed conforming loan amounts.? There are often banks at a regional level that offer Adjustable Rate Mortgages at a discounted rates based on the amount of assets depositors have placed with them.? While these may carry better terms than some national banks, the guidelines are typically more stringent as these loans are held in the bank?s portfolio for investment.
Terms of the Loan
You will also find that jumbo loans will be available with the same terms as traditional loans in most cases, and can have terms of anywhere from 15 to 40 years. The longer the loan is stretched out, of course, the lower the payments, but the more expensive the loan is.
Qualified mortgage or QM and the Jumbo Mortgage Market.
On January 10th, 2014 the QM or Qualified mortgage laws took effect.? While there are pages of new regulation and some conforming and government program will fall under TQM or temporary qualified mortgage guideline giving them several years to conform, the Jumbo loan market must conform now.?? While the end investor purchasing a Jumbo loan mortgage back security now has the comfort of knowing the quality of the offering is consistent by law, the ability to qualify for the affluent borrower has become substantially more challenging.? As a result, high-end and luxury home buyers are starting to use a variety of creative solutions resulting in easier qualifying parameters, lower overall monthly expenses and lower liquidation requirements.
This is only a little bit of information about jumbo loans. In some cases, people will really take to a jumbo loan, in others, they will be looking for some more sound solutions. If this sounds like you, seek out an advisor to help find a solution that meets your needs.
If you need help with jumbo mortgage loans , reach out to Capital Solution Services. Reach them online at website or by phone.