Have you been eyeing your luxury dream home? Sticker shock can be a little overwhelming as a borrower. You may be wondering how you’ll ever be approved for a loan that large. Those fees and interest rates must be crazy too. Maybe high-end property is only for the rich and famous. What? Nonsense! This is what a jumbo loan is for. Homes that require loans exceeding the loan limits set by government sponsored entities can be financed through a jumbo loan. This financing structure is usually more suitable and generally preferable for borrowers in the high-end home market or for those who are interested in refinancing their pre-existing large mortgage. Traditional loans must conform to the requirements set by Fannie Mae and Freddie Mac; however, jumbo loans present another alternative that grants buyers extended flexibility and benefits that they can use to their advantage. A jumbo loan is one way to buy a high-priced or luxury home. If you have a lower debt-to-income ratio, a higher credit score, and a larger down payment, a jumbo loan may be right for you. The limit on conforming loans is $510,400 in most areas of the country, but jumbo mortgages can exceed these limits.
Buyers with a little more financial stability and their sights set on a luxury home have some options based on their qualifications. Jumbo loans generally allow borrowers to enjoy larger loans at a lower rate.
The qualifications for jumbo loans are similar to those of a standard conforming loan. Lenders assess the borrower’s monthly income, monthly expenses, excess cash, and credit scores to decide if a particular borrower would be a good investment. Lenders are looking to make sure that you are financially stable with a steady source of income and low debt.
LEARNING MORE: THE TIPS AND BENEFITS
While qualifying for a jumbo loan may take some extra effort, those who are qualified applicants will enjoy certain flexibility and benefits while paying back their loan. These loans can allow variations of the loan terms. What this primarily does is grant borrowers the ability to adjust the amount of time on the fixed-rate loan or even adjust the rate of the mortgage. Jumbo loans help borrowers use the full amount of money from one loan instead of having to break up their loans. With less hoops to jump through, borrowers can save time, money, and hassle.
It is important to note that these are larger loans that place the lender at a higher risk, so the borrower will likely be expected to pay higher interest rates. A good credit history and score is absolutely essential to getting approved. It is a smart idea to double check all credit reports for any potential inaccuracies. Ensure your statement is accurate. It’s no secret that being accepted for a jumbo loan can be difficult. You must be able to prove that your income is high enough to be able to afford monthly mortgage payments. It is also recommended to avoid investing in any other properties and take efforts to minimize any lingering debt. Large expenses will be noted and can be reasons you may not qualify. It is important to lenders that they can feel confident that you have the funds to repay the loan with timely payments.
Ready to see if you qualify for a jumbo loan? Take the next steps toward financing your luxury home purchase! Contact us today to go over your qualifying potential and learn more.