| With many home sizes and prices increasing and savings rates decreasing, a jumbo mortgage loan may be the way for some home buyers to go. Considering a 30 year jumbo loan or one with other terms? Here are some tips to help you make the best decision.
A Jumbo Mortgage Loan is One Way around FHA Loan Limits
Each year Fannie Mae, Freddie Mac and Ginnie Mae review and set mortgage loan limits. For 2006 and 2007 the limit for a single family home was $417,000. Loans exceeding that amount are called Jumbo Loans. Jumbo loan lenders can charge higher interest rates. You have the flexibility of borrowing more with a jumbo loan but it will cost you. Jumbo loans are a type of non-conforming or non-conventional loan (they do not conform to FHA/Federal Housing Administration loan limits). Jumbo mortgage rates are higher than those for conforming loans because they are not federally guaranteed. Jumbo mortgage rates are also a bit higher because, unlike conventional loans, they are not resold very briskly.
You Have Options Among Jumbo Loan Products.
Available loan products have increased significantly in the last several years. With greater variety in home loans comes greater accessibility to mortgage loans among potential home owners. For home owners willing to do the leg work the financial benefits are high. What kinds of jumbo mortgage loans are available?
- 30 year jumbo loan – jumbo loan rates and payments remain constant throughout the life of the loan. Any variations are likely to be small and prompted by changes in escrow expenses – not interest rate changes. Fixed rate jumbo loans are also available for shorter and longer terms.
- Interest only jumbo loans – this type of jumbo loan is available with different terms and conditions. A 5/1 jumbo interest only ARM is one available product. This type of loan offers fixed, interest only payments for five years from the date of origination. After this period has expired, the home owner must make payment on the interest and principal. Interest payments vary with interest rates.An interest only jumbo loan is one of the available kinds of hybrid/adjustable rate mortgage products.
- Low or no documentation jumbo loans – These jumbo loans are available for borrowers that can’t or choose not to provide appropriate income verification documents.
Talk with your lender to learn if a second mortgage is a better option for you than a jumbo loan. FHA loan limits are reviewed and may change annually. As a result, jumbo loan limits may also change. Learn about FHA limits before you look into jumbo loans. Jumbo loans also extend to super jumbo loans a great option for commercial buyers. Because of the greater risk to the lender, borrowers should anticipate a more careful application review before a jumbo loan is granted.
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