Jumbo Loans - What does it mean?
The jumbo mortgage loans in the United States pertain to the mortgage loans that consist of high account value. But the amount goes beyond the traditional limits of conforming loans. Freddie Mac and Fannie Mae are the two govt. supported agencies that set the standard on the highest limits of loans that are concerned with individual mortgage which has been bought by them from the lender. This helps them to loosen up the liquidity rate to allow more mortgages. At times when full value of loan remains uncovered by FHLMC and FNMA, then the loan available is called a 'jumbo loan'. Ordinarily, the jumbo home mortgage loan interest rates are higher that of conforming loans. But, with an ascending trend in the GSE, there is a dip that has been experienced in the jumbo loans as compared to the conforming loans.
In 2010, the conforming loan limit was $417,000 in many general areas of the United States excluding Guam, the U.S. Virgin Islands, Hawaii, and Alaska. The relatively high cost zones consisted of a value of $938,250 and $729,750 respectively. This higher value related to jumbo home mortgage loans came down in 2011 (October) and was listed as $625,500 finally.
Benefits: Jumbo Home Mortgage Loans
Jumbo Loans - What are the advantages/benefits associated with it?
There are various advantages that are linked with jumbo home mortgage loans when compared with other financing options that are available for buying homes in posh areas.
Advantages/benefits of jumbo loans are:
- $ 2- 2.5 million of financial support is readily available in jumbo home mortgage loans.
- The comfort of possessing a single loan instead of having a number of mortgage loans.
- Intelligent and very consumer friendly pricing of jumbo home mortgage loans.
- The presence and availability of options such as flexible mortgage rates.
- Fast arrangement that comes with instant in-house underwriting
Who qualifies for a Jumbo Loan?
To qualify for a jumbo mortgage loan today, you should expect:
As far as eligibility is concerned, a person has to follow some guidelines to qualify for the jumbo loans. Here are some points that need to be noticed:-
- An individual requires to at least put in a 20 percent of down payment for buying purpose.
- Person's income has to be documented
- As jumbo loan rates are not fixed, one has to possess a flexible-rate of loans.
- The individual's mortgage amount should not exceed 38 percent of his/her monthly income.
Jumbo mortgage loans in today's time arrive through renowned banks that store the loans rather than selling them off. As such, these loans are often called as Portfolio Loans highlighting the old banking patterns of yesteryears where banks has high mortgage interest rates and collected money in that manner.
Even as jumbo mortgage loans are available at low rates, banks still can profit through jumbo loans as rate of interest on deposits are dipping nowadays. Hence, many banks rely on jumbo mortgage loans whose value goes up as deposit interest rate increases.
MetLife Bank, GMAC Mortgage, Bank of America, U.S. Bank etc. is some stellar banks that have been associated with the jumbo mortgage loans market according to the lenders.
Down payments have been the biggest trend that is involved with jumbo loans since last two years. It's a bit tedious work to locate a bank that issues jumbo loans where the down payment doesn't exceed 20 percent or is less.