If you’re looking into the housing market, its no guess that you’re out there searching for a mortgage loan. Upon your search, you’ll probably hear the term “jumbo loan”, or maybe you’ve heard it on the television already. Well, if you’re confused, you shouldn’t be, they’re actually pretty self explanatory. Jumbo loans are simply larger than your typical mortgage loan. There are a few things you should be aware of though, because these jumbo loans do have stricter requirements to qualify for them.
First you need to know the conforming limit of your area. This is the base line that tells you what a jumbo loan is. They can vary from location to location, but most areas are right around $420,000. What this means for you is that any amount higher than that, would be considered jumbo. So if you’re looking to move into a nice, luxury home, this is the route you would be looking at taking.
The next aspect of the jumbo loan you need to take into consideration, is what you should be expecting to provide in order to qualify for your loan. Jumbo loans have gotten much more strict over the past few years, so the first thing you can expect is having to be able to make a down payment of at least 20% for the purchase. If you have 20% equity from a refinance, that should work as well.
You will also need to provide documented income for anyone who is going to be on the application. Most lenders ask for a minimum of two years back; so it is wise to make sure you have all these documents gathered and verified, even before you begin your search for the mortgage lender. You should expect to receive an adjustable-rate loan, because when it comes to jumbo loans, fixed-rate loans are extremely rare. The last thing you can be guaranteed to expect is for your monthly mortgage payment to be no more than 38% of your income before taxes.
This is pretty much all of what you need to know about jumbo loans. If you’re considering looking for a jumbo loan, I highly recommend shopping around for your mortgage lender. Finding the right lender is just as important as finding the right home. Make a few appointments to meet with a few different places just to see the range of rates they’ll be able to get you. It just makes it that much m