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Jumbo Mortgage

There are many different mortgage products out there that cater to the different needs that individuals have when they are looking to purchase a home.  For instance, a person with a low credit score may need a bad credit mortgage, while someone else may need a mortgage refinance.  If you are in the market for a very large or expensive house, you may need what is called a jumbo mortgage. 


As you might suspect, a jumbo mortgage is for a much larger amount than a regular mortgage.  Most lenders have an upper limit to the amount of money they are allowed to lend to each individual who applies for a loan.  This cap is generally around $417,000 dollars, so for people who need to borrow less than that amount, any lender can work with them with a variety of loan products and stick to the current interest rates. 


However, if you need a loan for an amount above the $417,000 cap, you will be looking at loans in the jumbo mortgage category.  There are different guidelines set by the lenders for this type of a mortgage, and this makes it worth your time to shop around for the best terms.  Do remember, that fewer lenders offer jumbo loans, so your options will be fewer than with a conventional loan and it may take a little more work to find the right lender. 


You can use a jumbo mortgage for mortgage refinancing as well as purchasing.  With the rates so low right now, people who got a jumbo mortgage a few years ago when they were higher may want to do a mortgage refinance to lower their payments.  In order to obtain a jumbo mortgage, an individual must prove income, assets, and seasoned money.  Different lenders will require different types of documentation and there also may be different requirements when it comes to the down payment that must be brought in at closing. 


Because of the larger amounts of money being loaned, a jumbo mortgage will usually have higher interest rates than the conventional mortgage.  This is because of the greater amount of risk that the lender is taking in order to loan large amounts of money.  Sometimes, the interest will be lowered if you are able to make a larger down payment.  The terms of jumbo loans may be fixed-rate or adjustable rate mortgages, and will vary in the length of the term with options for 15, 20, or 30 year loans being the most popular.  If you are looking at an expensive house, you must keep in mind that you will be dealing with a jumbo loan.