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What are Jumbo loans (large-amount mortgages)

When we think of Jumbo or Jumbo mortgages loans, we can imagine something that promises a great reward or that we may not be able to handle. There is part of the truth in this statement and it is what we will try to find out better in this article.

Article content

  1. What are jumbo loans about?
  2. Jumbo Mortgage Rates
  3. What do you need to get a jumbo mortgage loan?
  4. Final remarks

What are jumbos about loans

A jumbo loan or jumbo loan represents a over-the-limit mortgage credit compliance imposed by the FHFA (Federal Housing Finance Agency). This means that the amount granted by the bank or lender is not backed by the government.

In most of the United States, the minimum for this operation is $ 484,350 and you will not get it through Freddie Mac or Fannie Mae.

Also known as non-conforming conventional mortgages, they involve greater risks for those who offer them since they are not insured by federal entities.

As is logical to believe, they are designed to buy luxury properties in very attractive real estate markets and where competition for land increases with levels of prosperity.

Jumbo loanJumbo loan

  • Interest: Fixed or variable
  • Deadline: 30 years

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Jumbo MortgageJumbo Mortgage

  • Interest: Fixed or variable
  • Deadline: 30 years

More infoRequest
Jumbo MortgageJumbo Mortgage

  • Interest: 3.75%
  • Deadline: 30 years

More infoRequest

Depending on the county, the limit could be set at 150% more or the equivalent of $ 726,525. This applies to places like Alaska, Hawaii, the Virgin Islands (US), Guam, and other mainland locations where home values ​​are above this average.

These mortgage loans usually have a fixed or variable rate and the terms of their hiring vary from one financial institution to another.

Jumbo Mortgage Rates

Previously, jumbo mortgages they had higher interest rates than conventional ones for different reasons. However, this difference has been reduced over time, becoming comparable to each other or even less depending on the percentage of down payment.

So it is always advisable to compare mortgages to obtain the best conditions.

It seems important to us to emphasize that, although these financial products cannot be endorsed by government-sponsored companies, there are other institutions that can handle them without problems.

Since these values ​​imply a greater risk before the possibility of default, are traded based on a higher return premium than with traditional options.

What do you need to get a jumbo mortgage loan?

The requirements for jumbo loans They are stricter than for other mortgages conventional.

Jumbo planeIf you are thinking of acquiring a property of at least half a million dollars and you do not have the money in the bank, you need support. This means that you must have a score
credit far above average and income quite convincing.

With this in mind, we’ll break it down like this:

  • Reserve funds. It is clear that the more money you have in your accounts, the greater the chances that they will pay attention to you. Since this is a sum of money that many will not see in their lifetime, lenders need to make sure that you can pay.

    That is why they need to verify that you have a sufficient cash reserve for 6 months or a year of monthly payments.

  • Relationship between income and debts (Debt-to-income ratio). This information is important because if your credit score is below 700, you have to compensate with less debt. To avoid being over-indebted, your DTI should not exceed 45%.

    This consideration can be more flexible as long as you have assets or cash to support your request.

  • Documentation. Unlike a conventional mortgage, the jumbo has more requirements in terms of documentation about your assets.

    Among other things, you will need your current and complete tax returns, account statements, 1099 forms, W2 forms and any other information about investments or accounts.

  • Income and score credit. It is estimated that people with incomes of $ 250,000 to $ 500,000 are those who present good conditions for these loans.

    This should be combined with a credit score above 740, which may be lower if your level of debt supports that condition.

  • Down percentage. In the past, financial entities that granted jumbo loans used to ask you for at least a 30% down payment. This has changed and you can now expect to pay 10-20%.

    As this financing is so high, paying less than 20% could even prevent you from having to hire the famous PMI.

Final remarks

Having the purchasing power to take out a jumbo loan is good news for anyone. Still, there are important considerations behind this decision, such as taxes, closing costs, down payment, and paperwork requirements.

Ultimately, it will always be better for you and the bank to handle a single large debt than to process 2 or more mortgages at the same time. If you are looking jumbo mortgages, in the Business Blog comparator we have the most attractive for that luxury property.

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