If you’re looking to purchase a home in the New Jersey area, and unless you’re fortunate enough to have enough money saved up to purchase the home outright, you’re going to need a mortgage. The question is what size mortgage will you need. A great deal of the size mortgage you get will depend on your ability to afford a certain amount for a monthly payment but it will also have a great deal to do with the cost of the home. If you’re looking at a home that is in excess of $417,000, you are going to be looking for jumbo home mortgage loans NJ.
Jumbo loans are loans that exceed the standard loan size of $417,000 and they don’t always work like a standard mortgage would. In fact, many banks are becoming more leery about offering jumbo mortgage loans as many of these jumbo loans were written during the housing bubble and many of these jumbo loans have become burdens to lending institutions balance sheets. That is because many mortgages in default came from homes in which a jumbo loan was needed by the homeowner.
However, the downturn in the housing market has actually helped in some respects when it comes to jumbo loans. For example, you’ll have far more options when it comes to a jumbo loan today than you did in years past. In many cases, a jumbo loan was always an arm mortgage which meant that the rate could be adjusted and this could cause the home to be rather unaffordable if the rates went to high. Today not only do you have adjustable arms, you also have the option of hybrid arm mortgages as well as fixed-rate mortgages which are very beneficial to people looking for a jumbo mortgage.
However, you will need to be aware that a jumbo mortgage is going to cost a bit more than a standard mortgage. Typically interest rates for jumbo loans are a bit higher. Fortunately, once the loan has been paid down to a certain extent, you may be able to refinance your existing jumbo mortgage into a standard mortgage and get a more favorable interest rate as well as lower monthly payments.