Whereas single-unit conforming loans are $417,000 and less, jumbo loans are non-conforming mortgages whose values exceed conventional mortgage costs. While government-sponsored entities Fannie Mae and Freddie Mac support conventional loans, they do not back jumbo mortgages.
Funding is typically provided from big banks, however, jumbo loans can also be contained in secured collections and sold to outside investors on the secondary market.
Popular for luxury-home loans, jumbo mortgages are usually more expensive to refinance because their closing costs are calculated as percentages of the overall loan amount. Plus, valuation shifts take more place more often with luxury homes than lower-priced properties.
Jumbo loans are risky, which is why they possess greater down-payment demands and higher interest rates. While some deem 10% sufficient, lenders often want a borrower to make a down payment equal to 20% of a property’s sales price, or to own a minimum of 20% equity in their home if they are refinancing.
Borrowers can anticipate a detailed analysis of their income history and credit by lenders during the process of acquiring a jumbo mortgage. Lenders wish to confirm a borrower has the financial ability and assets to repay a jumbo loan, thus they’ll request W-2 forms dating as far back as two years, bank statements, pay stubs and validation of various liquid assets. Qualifying credit scores can alter by lender, but usually a score of 680 is satisfactory.
Many jumbo loans are deemed “qualified mortgages”, thus borrowers are advised not to have a debt-to-income ratio greater than 43%. In the event of exceeding this limit, borrowers can still obtain a non-qualified mortgage if a lender can conclude the loan is capable of being repaid appropriately.
Jumbo mortgages are allowed to be accessed for existing or newly constructed single-family and multi-unit buildings of up to four units. They are indeed permitted to be used for investment properties and second homes, yet securing financing for such projects is often tougher for borrowers.
Both fixed-rate and adjustable-rate mortgages are available, and standard repayment terms are 15 or 30 years. Many borrowers opt for the fixed-rate mortgage due to its uncomplicated and straightforward approach that is easier for borrowers to understand. Installments in the principal balance and interest are stabilized as monthly payments that stay unaltered throughout the life span of the loan agreement.
Adjustable-rate mortgages are casually referred to as ARMs, and start with more reduced early payments than fixed-rate mortgages. They are ideal for short-term goals, with substantial increases in payments occurring as the loan agreement moves forward since they are dependent on market conditions and indexes.
Call Dominion Mortgage and Financial Services today at (864) 224-3302 to get started obtaining a jumbo loan for a property in areas such as Anderson, Greenville or Spartanburg!