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A jumbo mortgage loan does not differ drastically from a standard property mortgage, but there are a few key differences worth understanding.
Jumbo Mortgage Loans
A jumbo mortgage loan is one taken for a top-dollar property. In Colorado, as in most of the U.S., a jumbo mortgage loan is any mortgage that exceeds $417,000 - the limit set by Fannie Mae and Freddie Mac for conforming loans.
Fannie Mae and Freddie Mac, the two agencies that buy the majority of real estate mortgages, will not buy a loan for an amount greater than $417,000 in most parts of the country (Hawaii, Alaska, and a few other territories. In the case of large jumbo mortgages, loans are often financed through other investments such as banks and insurance companies, and so a jumbo mortgage loan falls into a different category. The rates for jumbo mortgages also tend to be higher than conforming loans because they are considered to higher risk.
What This Means for Jumbo Mortgage Interest
Since jumbo mortgages are higher loan amounts, there is more to lose. The size, coupled with other factors, results in somewhat higher jumbo mortgage rates than those carried by conforming loans. Since percentage points on jumbo mortgage rages can mean sizable payment differences, buyers need to shop for good lenders when applying for a jumbo mortgage loan to get the best jumbo mortgage interest rate. Buyers need to shop for good lenders when applying for a jumbo mortgage loan to get the best jumbo mortgage interest rate.
In truth, jumbo mortgage interest rates are only one thing to consider when shopping for a jumbo mortgage.
There are additional fees and closing costs to be considered that could even out the difference in jumbo mortgage rates. Sometimes, the company with the higher jumbo mortgage rates is actually the cheapest, all things considered.It's also important that buyers think about their goals, plans for the future, and other options. Just like conforming mortgages, jumbo mortgage loans come in a variety of products. Buyers have the option of taking out loans with adjustable jumbo mortgage rates with 3 or 5 year locked rates that adjust after that period, or fixed fates at 15 or 30 years.
Choosing the right product for your situation, either a variable or fixed jumbo mortgage interest rate, will depend on how long you plan to stay in the home or if you plan to refinance sooner rather than later.Buyers should not be scared off from higher jumbo mortgage rates; jumbo mortgage rates are higher only by a quarter of a point or so for well qualified buyers. What’s more, jumbo mortgages are the only option for home buyers in many parts of the country because $417,000 really isn’t that high a price in today’s housing market. As a matter of fact, jumbo mortgage loans are the only type available in many areas. In the end, the best way to find a good jumbo mortgage loan is to shop around and find a reputable lender with good jumbo mortgage interest rates. A good lender will take the time to work with you to understand your goals so they can help you choose the best product.
