If you are looking to purchase a home, there are usually a few loan options to choose from. However, not all mortgages are created equally, and there are limits to what most home loans will buy. If you are buying in a high cost of living location or are purchasing an expensive property, a traditional loan likely won't be enough. Jumbo home loans are what you need to consider if you are looking to buy a property that's too expensive for a conventional home loan. Here's what to know about jumbo house loans.
When You Need One
The first thing to know about jumbo home loans is when one is necessary. Most conventional mortgages conform to standards set by Fannie Mae and Freddie Mac, both of which are government-sponsored. However, there are limits to what you can borrow with this type of mortgage. For example, if your loan exceeds $647,200, a conventional loan is not an option; you will need a jumbo loan. It's important to note that loan limits for conventional loans are higher in some locations with higher than average living costs.
They Can Have More Stringent Requirements
Jumbo home loans can be challenging to get for some buyers. Since jumbo loans are a more significant risk for lenders, requirements may be stricter. Before you apply for a jumbo loan, it's a good idea to take a close look at your finances. Lenders will look for a good credit score, manageable debt levels, and a high enough income to pay for the loan. You will also need some cash to obtain a jumbo mortgage. Many lenders will have higher down payment requirements for this kind of loan.
It's Still A Good Idea To Shop Around
Another thing to know about shopping around for a jumbo mortgage is that it's not that different from searching for a conventional mortgage. You will still want to compare and contrast a few lenders before committing. Before deciding on a jumbo home loan, you will also want to consider mortgage rates, loan fees, and loan terms. Jumbo home loans can also be used for more than just primary properties. You can also get a jumbo mortgage for a vacation home or an investment property.
Jumbo home loans are necessary when conventional home loans are not enough. There are three things to know about jumbo loans. First, knowing when you need a jumbo mortgage is crucial. Second, jumbo home loans may have more stringent lender requirements. Finally, even with jumbo mortgages, it's still a good idea to shop around.
For more information about jumbo home loans, contact a local mortgage company such as Blake Mortgage.