Adjustable Rate Mortgages (ARM)
An adjustable rate mortgage (ARM) is based on a predetermined index and margin, which can go up or down at specified intervals based on the index.
Conventional home loans have a limit of $484,350. So if you’re shopping for an expensive house or in a pricey neighborhood or market, you’ll need a different option when it comes to financing. A jumbo loan may be a good fit! Jumbo loans are designed for higher-priced homes and luxurious properties. However, there are more differences between jumbo loans and traditional, government-backed mortgages than merely the loan size. Here is everything you need to know about jumbo loans.
A jumbo mortgage, or loan, is a loan that exceeds the conforming lending limits regulated by the Federal Housing Finance Agency (FHFA). This limit restrains the loan balance on mortgages that are backed by a government-sponsored program like Fannie Mae, Freddie Mac, and Ginnie Mae.
Down payments play a significant role in the jumbo loan application process. While conventional loans may not even require a down payment, the traditional 20%, or more, may be a prerequisite for many jumbo lenders.
Due to the increased loan size of these mortgages, the qualification process is more stringent. Every consideration from income, debt, credit score, down payment, is evaluated and there is typically more stringent financial requirements. While conforming loans have their underwriting requirements set by Fannie Mae and Freddie Mac, jumbo loans carry a higher risk for the lender, and the underwriting requirements are determined by each investor.
While different government-backed mortgage programs have lower credit score minimums, jumbo loans typically have higher requirements. Due to the increased risks for lenders, a high credit score and strong credit history will be required to be approved for a jumbo mortgage.
While debt-to-income ratio is a standard consideration for any type of lending, it is an especially scrutinized factor for a jumbo loan. Due to the high cost of these types of loans, your lender will typically require a lower debt-to-income ratio.
Based on the price of the home and other underwriting considerations, some lenders may require you to have cash reserves on hand. It is not uncommon for lenders to require between three and 24 months of cash. There are several ways to satisfy this prerequisite for liquid assets, like retirement accounts. This condition can also be mitigated with a very low DTI or a sizeable down payment.
It used to be common for jumbo loan interest rates to be higher than the rates for conventional loans. This is because not only does the higher dollar amount create more risk for the lender, but more expensive homes can be susceptible to larger fluctuations in value. However, today, while still somewhat higher, the interest rates for jumbo loans are relatively similar to those for other mortgage products.
While deducting the interest paid on a conventional mortgage from your taxes has long been an option for homeowners. Recent changes in tax law now allow holders of jumbo mortgages to deduct the interest paid on the first $750,000 of your primary or second home. However, you should always consult a tax professional about your situation.
Jumbo loans can be used to purchase a variety of types of homes. Whether it’s your primary residence, a second home, or an investment property; depending on the price, value, and your personal financial status, a jumbo loan can be a viable option for your next home purchase.
Conventional home loans have a limit of $484,350. So if you’re shopping for an expensive house or in a pricey neighborhood or market, you’ll need a different option when it comes to financing. A jumbo loan may be a good fit! Jumbo loans are designed for higher-priced homes and luxurious properties. However, there are more differences between jumbo loans and traditional, government-backed mortgages than merely the loan size. Here is everything you need to know about jumbo loans.
A jumbo mortgage, or loan, is a loan that exceeds the conforming lending limits regulated by the Federal Housing Finance Agency (FHFA). This limit restrains the loan balance on mortgages that are backed by a government-sponsored program like Fannie Mae, Freddie Mac, and Ginnie Mae.
Down payments play a significant role in the jumbo loan application process. While conventional loans may not even require a down payment, the traditional 20%, or more, may be a prerequisite for many jumbo lenders.
Due to the increased loan size of these mortgages, the qualification process is more stringent. Every consideration from income, debt, credit score, down payment, is evaluated and there is typically more stringent financial requirements. While conforming loans have their underwriting requirements set by Fannie Mae and Freddie Mac, jumbo loans carry a higher risk for the lender, and the underwriting requirements are determined by each investor.
While different government-backed mortgage programs have lower credit score minimums, jumbo loans typically have higher requirements. Due to the increased risks for lenders, a high credit score and strong credit history will be required to be approved for a jumbo mortgage.
While debt-to-income ratio is a standard consideration for any type of lending, it is an especially scrutinized factor for a jumbo loan. Due to the high cost of these types of loans, your lender will typically require a lower debt-to-income ratio.
Based on the price of the home and other underwriting considerations, some lenders may require you to have cash reserves on hand. It is not uncommon for lenders to require between three and 24 months of cash. There are several ways to satisfy this prerequisite for liquid assets, like retirement accounts. This condition can also be mitigated with a very low DTI or a sizeable down payment.
It used to be common for jumbo loan interest rates to be higher than the rates for conventional loans. This is because not only does the higher dollar amount create more risk for the lender, but more expensive homes can be susceptible to larger fluctuations in value. However, today, while still somewhat higher, the interest rates for jumbo loans are relatively similar to those for other mortgage products.
While deducting the interest paid on a conventional mortgage from your taxes has long been an option for homeowners. Recent changes in tax law now allow holders of jumbo mortgages to deduct the interest paid on the first $750,000 of your primary or second home. However, you should always consult a tax professional about your situation.
Jumbo loans can be used to purchase a variety of types of homes. Whether it’s your primary residence, a second home, or an investment property; depending on the price, value, and your personal financial status, a jumbo loan can be a viable option for your next home purchase.
Standard Mortgages has loan officers in New Orleans, Metairie, Baton Rouge, Slidell, Mandeville, Lafayette, Lake Charles, Shreveport and Dallas. We also serve Alabama, Arkansas, Colorado, Florida, Georgia, Kansas, Mississippi, Missouri, North Carolina, Oklahoma, South Carolina, Tennessee, and Texas.
Every homebuyer has unique needs. Standard Mortgage strives to meet them with quality service and individual attention. We pride ourselves in giving you the mortgage information, loan options, and convenient assistance you’re looking for, including what to expect when you apply for a mortgage loan. With a variety of loan programs and an established network of lenders behind us, we help you find the loan that best suits your needs and at a competitive rate.
An adjustable rate mortgage (ARM) is based on a predetermined index and margin, which can go up or down at specified intervals based on the index.
A conventional loan must meet nationally standardized guidelines, such as income, credit, and property requirements. Loans are subject to amount limits set by Fannie Mae and Freddie Mac.
The Federal Housing Administration — commonly referred to as HUD — issues loans that provide affordable mortgages to the average homebuyer.
A fixed-rate mortgage is the most common type of mortgage program. Your monthly payments for interest and principal never change.
A USDA Rural Development loan helps rural home buyers purchase a home with no down payment, low fixed rates, simple credit requirements, and the guarantee of the federal government.
Veterans Administration loans help veterans — including active duty service personnel and certain categories of spouses — finance the purchase of their homes with favorable loan terms.
Standard Mortgage is here to help you navigate the daunting, complicated process that lies ahead. In this eBook, we'll walk through the steps you'll have to take before you hold the keys to your new home.
The team at Standard mortgage has developed additional and related content centered around jumbo loans.
Here are few things you'll need before applying for a jumbo mortgage.
Learn MoreHighly-priced property means there are some differences in the mortgage process.
Learn MoreBuying a home is one of the biggest purchases you'll make in your life.
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