Jumbo Home loans

As soon as you start earning enough from your job to buy your dream home, you will definitely hear a lot from the mortgage professionals about “Jumbo Loans”.  You may have heard of it because of our high priced real estate market.  If you are considering higher priced properties, you may have to consult, Christian Penner, a mortgage professional about these Jumbo Home Loans.

What is a Jumbo Loan?

In the United States, a jumbo loan is a mortgage loan that is above the conventional conforming loan amounts. The conforming loan standard is set by the two government sponsored corporations Fannie Mae and Freddie Mac.  These corporations purchase the bulk of all U.S. residential mortgages from banks and other private mortgage agencies.  This selling of mortgages to Fannie Mae and Freddie Mac allows lenders to free up their liquidity and lend more money for mortgages.

The requirements of Jumbo loans are different from other loans for borrowers because they require the following: lower debt to income ratios, higher credit scores, large down payments, and higher reserves. Jumbo Loans also have higher interest rates.  Each lender has varying differences regarding their standards on jumbo loans.  Therefore, it is good practice to consult your mortgage professional about the idiosyncrasies of Jumbo Loans.

Risks

Jumbo Home Loans are higher risks for lenders. Why? It is because, as we have seen in the past, jumbo mortgage loans default, and it is usually harder for the property to be resold after a default. Luxury homes do not sell as fast as normal conforming homes.  No wonder lenders often require higher down payments from loan seekers opting for jumbo home loans.

Types of Residential Home Properties

Larger single-family residential homes are usually the type of property a Jumbo Home Loan is used for. In the U.S., there are communities in every corner of the country that have the upscale price tags.  Condominiums can cost in the millions too.

For example, in South Florida loan seekers opting for Jumbo Mortgage Loans are looking for classy and high end homes with price tags ranging from $750,000 to $10 million.  This is becoming more common place in South Florida.  With the values of properties increasing the need for Jumbo loans increases as well.

Qualification in Obtaining Jumbo Home Loans

As discussed above, jumbo loan requirements for borrowers differ from conformational mortgages, but jumbo loans go through the same type of underwriting process as conventional conforming loans.  In order to apply for a jumbo loan, a borrower should be able to show the adequate income and assets to afford the jumbo loan.  This normally entails a debt-to-income ratio with a maximum percentage of 45% of income to qualify.  In addition, jumbo loan borrowers usually need to have 6 months of reserves for monthly payments in their banks.  By contrast, conventional conforming borrowers usually require only two months of reserves for qualification.

If you are considering a jumbo home loan, my advice is for you to consult a qualified lending professional about it.  You can discuss goals and plans and find out the different jumbo loan options.  The option you choose will be the right one for you as long you have been thoroughly informed about all possibilities.  You will be confident enough to buy the house and have the knowledge that you comfortably can afford the loan you obtain.  That is why learning about all available terms and conditions is of utmost importance.  Please contact, Christian Penner, who is a local mortgage professional today!

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Jumbo Home loans | Jupiter | West Palm Beach