Jumbo loans come at a high price for home financing but this is above conventional loans. The standard of conventional loan is set by the two government-sponsored enterprises- Fannie Mae and Fredric Mac. This is designed to finance luxury properties in highly competitive real estate markets. The loans which are above the conforming limits they can apply for jumbo loans. The loans are not guaranteed by Fannie Mae and Fredric Mac. Jumbo loans differ from country to country, though it keeps on changing from time to time.
Who can qualify a jumbo loan?
If you are planning to buy a house which costs close to half a million or more and you do not have that much sitting in a bank account, you probably need a jumbo mortgage. A minimum requirement for mortgages has been increasing since 2008. You need to show that you have the accessible amount of money to cover the jumbo mortgage payment. If you are applying for 30 years fixed rate mortgage then the accessible cash should be comparatively high. The income level depends on the size of the specific loans. Jumbo loans has more credit risk for the lender as it is not guaranteed by Fannie Mae and Fredric Mac. The borrower needs to prove that he has sufficient liquid assets to cash reserve equal to six months of mortgage payments.
Jumbo loan rates
The loan rates differ as the jumbo loans are not securitized by the government-sponsored enterprises but they are being supported by different financial institutions. The loan rates in some cases are higher and in some cases it is low. The annual percentage rate is same as per the conventional mortgages.
Down payment on Jumbo Loans
Down payment has loosed up this is the brighter side of the jumbo loans. 5% Jumbo Down Mortgage Texas in many countries like jumbo Texas mortgage. In earlier times there was a high rate of interest as the lender had the risk. But in today's lending environment jumbo rates are lower than conventional loans.
Who should get a jumbo loan?
The mortgages are considered most appropriate for the segment of higher income earners who make $250,000-$500,000. They are called HENRY (high earners not rich yet). It is preferred to those people who earn a lot but they do not have huge assets. This segment may not have a huge amount of money to buy a house but they have a good credit score and established a credit history. They even tend to have strong retirement accounts.
If you are planning to purchase a home in a highly rated market than you should talk to your lender if jumbo loan or mortgage is a right option for you. A pre-approval letter is very important from the lender before getting a home.