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San Diego Mortgage Group offers the best for a mortgage refinance or home purchase in California. Call today to learn about our Jumbo Loan options. What is a Jumbo Mortgage?
A jumbo mortgage is a mortgage with a loan amount above the industry-standard definition of conventional conforming loan limits. This standard is set by the two largest secondary market lenders, Fannie Mae and Freddie Mac. Due to increased housing prices, there was a large increase in the number of jumbo loan applicants. New loan programs were offered to address the large increase in jumbo loan applications. Because of the steep price increases during the recent years (2000-2006), mortgage loans are required in excess of the conforming limits in most big-city areas or their surrounding suburbs. The new loans are either a 40- or even 50-year amortization, or an interest-only option. They allow the jumbo loan borrower to pay the loan back over a longer period of time, or to defer any repayment of principal for a few years—thus saving them on their monthly payment. In some cases, the banker makes a larger profit if the loan takes more than 30 years to re What is considered a Jumbo Loan?
In 2006, the limit in the Continental U.S. was $417,000, or $625,500 in Alaska, Hawaii, Guam, and the U.S. Virgin Islands. Other large investors, such as insurance companies and banks, step in to fill the need, with maximum mortgage amounts going to the $1 million or $2 million range. A loan in excess of $650,000 is referred to as a super jumbo mortgage. The average interest rates on jumbo mortgages are typically greater than is normal for conforming mortgages, and vary depending on property types and mortgage amount. How are Jumbo Loans different from Traditional Loans?
Jumbo mortgage loan options are similar to traditional loan programs. They simply require a slightly higher down payment, usually of an additional 5% for similar program types. No-money-down programs are generally not available, but instead require a minimum of 5% down payment for a jumbo mortgage. Because the loans are large, jumbo lenders frequently offer variable loan programs to the jumbo client. The risk of an interest rate increase can result in a large dollar amount increase. Jumbo Loans are much more difficult to get financed now, read this USA Today article for a more in depth explanation.
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