Jumbo mortgages are not all that different from your everyday conventional mortgages but there are a some important items that one should understand. A jumbo mortgage loan is a home loan secured by a high cost property. It is not always a exotic loan, a term derived from Alan Greenspan, it is just more applicable for expensive properties. In California, Florida, New York, New Jersey, and other affluent high costs states in the U.S., a jumbo mortgage loan is any mortgage that is greater than $417,000 – which is the maximum loan limit established by Fannie Mae and Freddie Mac for conforming loans.
Fannie Mae and Freddie Mac, are the two government entities that buy most of the real estate mortgages in the housing industry. They will not finance loans which exceed $417,000 in the majority of states; although Alaska, Hawaii, and some others do not follow the rules. As a result, the big jumbo mortgage loans are sold to institutional investors, often banks and insurance companies, and then a jumbo mortgage loan fits into a altogether different realm. The mortgage rates for a jumbo mortgage are also not as low as a conforming loan due to the fact there is included risk.
Is the Loan Amount The Major Factor For What Jumbo Rate You Get?
Ultimately, the loan amount of a jumbo mortgage loan equates to there being more to lose. The loan amount along with other variables gives a result to the borrower of a higher jumbo mortgage rate when compared to those given on conforming loans. Since percentage points determine your payment, buyers should look around for a good source or broker when applying for a large mortgage loan in order to secure the best rate available on the market.
In all honesty, the interest rates is only one aspect to think of when searching for a jumbo loan. One needs to be cognizant of the extra fees and loan costs to be factored in which could clarify any differences in loan products. Sometimes, the company with the higher rate can actually be the lowest after everything is factored into the equation.
Selecting the kind of loan (adjustable or fixed jumbo mortgage rate) is better for you is linked to how long you plan to live in the home for. If it is less than a 3 to 5 year term, a short term fixed rate may work best for you. Otherwise, if you like the lower rate and feel you can refinance inside of 3 to 5 years, that may work too.
Home buyers need not become fearful or stay on the fence from higher jumbo mortgage rates; jumbo mortgage rates are usually higher just by .25% or one-fourth of a point for eligible borrowers buyers. In addition, jumbo mortgages are the sole alternative for home buyers in most sections of the country simply because $417,000 isn’t a high enough limit in today’s housing market. Moreover, jumbo loans are the only kind of home loan that people can get in many areas. So, the suggested way to nail down a good home loan is to find a solid, reputable and experienced lender. A trusted mortgage lender will offer you the time, educate you to to the right loan, focus on your needs so you will be satisfied and hopefully refer them another client.