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Jumbo Mortgage

There are several different types of mortgage loans available today, each catering to the different needs that individuals may have when they are looking to purchase a home.  For example, a person with a low credit score may need a bad credit mortgage, while someone else may need a mortgage refinance.  If you are in the market for a very large or expensive house, you may need what is called a jumbo mortgage. 

A jumbo mortgage is for a larger amount than a regular mortgage.  The current cap for a regular mortgage is $417,000, so any mortgage loan over that amount will be considered a jumbo loan.  There are not as many choices when applying for a jumbo loan as there are for a regular loan.  The interest rate is also higher for a jumbo loan.   

However, if you need a loan for an amount above the $417,000, you will be looking at loans in the jumbo mortgage category.  There are different guidelines set by the lenders for this type of a mortgage, and this makes it worth your time to shop around for the best terms.  There are many, many more lenders who do regular mortgage loans than there are that do jumbo loans.  This limits the competition a bit, which is not in your favor as a borrower.  With fewer lenders offering jumbo loans and fewer options available for them, it may take a little more work to find the right lender. 

A jumbo mortgage can be obtained for mortgage refinancing as well as purchasing.  With the rates at historic lows right now, people who already have a jumbo mortgage with a higher interest rate may want to do a mortgage refinance now to lower their payments.  To qualify for a jumbo mortgage, an individual must prove income, job longevity, valuable assets, and have seasoned money.  Various lenders may require different types of documentation.  Each lender may vary also in the amount of fees and closing costs that will be required at closing time.   

Because of the larger amount of money being loaned, a jumbo mortgage will usually have higher interest rates than the conventional mortgage.  This is because the lender is taking a greater amount of risk in order to loan the larger sum of money.  You may be able to buy down your interest rate by making a larger down payment.  The terms of jumbo loans may be fixed-rate or adjustable rate mortgages, and will vary in the length of the term.  Terms of 15, 20, or 30 years are usually offered.