Commonly Asked Questions About Jumbo Loans
What Is A Jumbo Loan And Why Would Anyone Need It?
A Jumbo mortgage is a loan program. It is used to allow people the ability to borrow over the maximum conforming loan limit set by the Federal Housing Finance Agency (FHFA). If you're looking to borrow over $647,200, then you'd seek Jumbo financing.
For more information on loan limits, click here.
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FHFA sets loan limits for Fannie Mae and Freddie Mac, the two government-sponsored enterprises that it regulates. These enterprises purchase mortgages that meet their standards from lenders and then they repackage them into mortgage-backed securities for investors. The majority of residential mortgage meet Fannie Mae and Freddie Mac standards, so most lenders share these guidelines.
What Are The Requirements For A Jumbo Loan?
Underwriting guidelines vary from one lender to another. Most Jumbo loans follow the same guidelines as conforming mortgages. However, they might have some additional requirements from one lending institution to another (these are called "overlays"). The requirements might include:
Higher credit scores than other loan types. Typically, a required credit score of a Jumbo loan would be over 700 - but guidelines are always changing so it is best to speak to one of our loan officers for advice.
Extra money saved than other loans types.
Larger down payment than other loan types.
Pros And Cons Of A Jumbo VS. Conventional Loan?
This depends on you! Jumbo loans and conventional loans will have slight differences such as rates, terms, and underwriting requirements. To get the most accurate answer, you will want to speak with a lender who offers both loans. They will be best fit to help you make the comparison to see which loan option is best for you.
Which Has Better Rates: Jumbo Loan Rates VS. Conventional Rates
Historically, conventional loans have lower interest rates. However, right now in 2022, many banks and lenders are making the rates of Jumbo loans lower than conventional loans. What this means is that the rates are changing daily and throughout the day.
This is why it is best practice to contact a lender who offers both types of mortgages, so they can guide you through an apples to apples comparison.
How To Refinance A Jumbo Loan?
Jumbo loans can be refinanced just like any other mortgage. As always the ability to refinance is based on market conditions at that time.
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A refinance means you’re taking out a new mortgage that will pay off the old mortgage.
How Do Jumbo Loan Rates Work?
Jumbo mortgages typically have a 30, 20, or 15 year term and there may also be adjustable rate mortgages available. The rates change daily and through out the day so it is always the best practice to contact a lender who offers both types of mortgages and then do an apples to apples comparison.
Why Are Jumbo Loans Cheaper Than Other Loans?
Typically the closing costs on Jumbo mortgages are the same as conforming loans when you work with our team, however the terms and costs are always subject to change so it is a best practice to call a loan officer directly and set up a Mortgage Consultation with our team.