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. Both in Colorado and most of the United States, 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. Therefore, the large jumbo mortgage loans are sold to other investments, often banks and insurance companies, and so a jumbo mortgage loan is categorized differently. 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
The size of a jumbo mortgage loan means there is more to lose. The size, coupled with other factors, results in somewhat higher jumbo mortgage rates than those carried by conforming loans. And since a small percentage of a point on jumbo mortgage rates translates into a sizable payment difference, buyers should shop around for a good lender when applying for a jumbo mortgage loan in order to find the best rate. Buyers need to shop for good lenders when applying for a jumbo mortgage loan to get the best jumbo mortgage interest rate.
In fact, rates are only one thing you'll want to consider when looking for a jumbo mortgage. There are closing costs and fees to consider that might even out the difference in rates. It's possible the company with higher jumbo mortgage rates may turn out to be the best deal in the end.
Buyers should also consider their future plans, goals, and other options that may be available to them. Like conforming mortgages, jumbo mortgages are offered in a variety product lines. 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 fifteen or thirty year fixed rates.
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 not that much higher 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 great mortgage lender will take the time to understand your needs so they can help you select an appropriate product.
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