GETTING STARTED WITH JUMBO
Jumbo Mortgages are popular loans, especially in areas with high housing prices. You can use a jumbo mortgage to buy or refinance a home. Most traditional mortgages will only finance you for up to $424,100, depending on your geographical location. This amount does vary by region, based on the average selling price of a home, with areas where home prices are higher, such as California and Hawaii, having higher limits for traditional mortgages. For example, conventional mortgages in some parts of California can go as high as $636,150. If you are buying a home with a loan that is larger than that, you will need a jumbo mortgage.
WHAT IS A JUMBO MORTGAGE?
Jumbo mortgages exist to help qualified buyers who were looking to buy homes in more expensive areas, such as Orange County, California. As housing prices rise, more people began to buy houses above the conventional conforming loan limits, which is $424,100 for the most part of the country. The popularity of Jumbo mortgages skyrocketed in the early 2000s.
KEY BENEFITS OF A JUMBO MORTGAGE
If you are considering a jumbo loan, you may be wondering what the benefits are. Here are three benefits of a jumbo mortgage:
- You Can Get a Loan for a Large Amount: The biggest benefit to a jumbo loan is that you can get financing for a home that costs up to $3 million.
- You Do Not Have to Dip Further Into Savings: A jumbo mortgage helps homebuyers buy homes that are priced above the conforming loan limit for their area. Without a jumbo loan, you may have to come up with the cash needed to pay the difference between a traditional mortgage and the cost of the house.
- You Do Not Have to Take Out a Second Mortgage: In some cases, people take out two or three mortgages to finance pricey homes. With a jumbo loan, you only have just one loan.
HOW DOES A JUMBO LOAN WORK?
Because you are taking out a loan for a lot of money when you get a jumbo loan, qualifying for a jumbo loan can be more challenging. Every lender is different, but most require you to:
- Have at least a 700 credit score
- Put a 10 to 20 percent down payment down or have at least 20 percent equity in the home in the case of a refinance.
- Have enough verifiable income that shows your mortgage payment will be no more than 38 percent of your pre-taxed income