When you are buying a home it can be a very exciting time. It can also be very overwhelming. How do you know what you can afford? What will your payment be? All of these questions can be answered by a reputable bank. Now if you are looking at a home that will require your loan amount to be more than $417,000 you will need to find a bank that specializes in jumbo mortgage loans.
Just as the name suggests, jumbo mortgage loans are large loans. The conforming limits covered by the government agencies Fannie Mae and Freddie Mac set limit loans to under $417,000. That does not mean that you cannot get the home you want. It just means that you will have to work a little harder to get your jumbo loan. There are a few more restrictions for a jumbo loan because there are more risks involved for the bank.
First and foremost, jumbo mortgages are for a much larger loan amount which makes it risky in itself. The mortgage crisis made it more difficult for homeowners to obtain large loans for fear that more homeowners would default. Do not let this deter you from applying for your jumbo loan though. If you have good credit, plenty of assets, a 20 percent down payment and sufficient income, your chances of getting approved are higher than you think.
Jumbo loans typically stay with the bank that provides you with the loan rather than being sold to an investor. This gives banks that offer jumbo mortgages a competitive edge. They determine what the guidelines are for each jumbo loan without having to consult with any investors. Because each bank can be different, you should shop around to make sure you are getting the best rate and the best service for your loan.
Jumbo mortgage loans are good for homeowners who are purchasing a home for the long term. If you are purchasing a home that you only anticipate staying in for 3-5 years, then a jumbo loan probably is not the right fit for you. It offers a larger payment and you will probably not see a return on your investment in the short term. If you foresee yourself in your new home for 15 years or more, a jumbo loan can be beneficial. The longer you are in your home, the more value you will get out of your home.