Understanding Jumbo Mortgages
Author: 1st American Mortgage
In simplest terms, jumbo mortgages are loans taken to buy expensive real estate that exceeds loan standards for average homes.
How are jumbo loans different?
What differentiates jumbo mortgage loans is the loan amount. Currently, loan amounts greater than $417,000 are generally considered jumbo mortgages. This determination is made by comparing industry standards for average housing loans as governed by the two biggest secondary mortgage lenders, Fannie Mae and Freddie Mac.
Fannie Mae and Freddie Mac set industry standards for 'conforming loans'; home loans exceeding those limits are considered jumbo mortgages. These two agencies cap the dollar figure for loans that they will buy (that's where the $417,000 figure comes from). Larger loans are funded by a variety of other investors, like insurance companies and banks. Note that the dollar figure set to qualify jumbo mortgages differs by locale, so the limit is higher in Hawaii and Alaska (and a couple other states). In most U.S. States, jumbo mortgages are those larger than $417K.
Best Terms - 30 Year Fixed Jumbo Mortgage Rate, 15 Year, or Variable 30 Year Jumbo Mortgage
Terms for jumbo mortgages vary much the same as other housing loans. Buyers can choose between variable rates, like 3/1 or 5/1 ARMs, for a 15-30 year jumbo mortgage, or a 15 or 30 year fixed jumbo mortgage.
Whether a 15 or 30 year fixed jumbo mortgage or an adjustable rate is best for you will depend on your plans and situation.
A 30 year fixed jumbo mortgage is better for those who plan to own the home for a very long time. With this type of mortgage, the rate will not go up but it will never go down, either - it remains at the same rate for the duration of the loan. This is good because the payment is predictable, and cannot rise sharply if interest rates do. On the other hand, the 30 year fixed jumbo mortgage rate is higher since lenders know they can never charge more than the original rate.
An Adjustable 30 year jumbo mortgage rate is usually the lowest. Lenders know they have the potential of benefiting from interest rate increases over time, so are willing to lend at a smaller margin in the beginning. Although, the lower rate won't last. A variable 30 year jumbo mortgage rate will be fixed for 3 to 5 years, and then will adjust annually according to an index. Even small increases could mean significantly larger monthly mortgage payments.
Choosing an adjustable rate is good when a buyer plans to move within the 3 to 5 year fixed period. For a buyer more concerned with smaller initial payments, or who will likely refinance in the near future, the variable 30 year jumbo mortgage rate is better than the30 year fixed jumbo ortgage. Why pay the higher 30 year fixed jumbo mortgage rate when the buyer knows this isn’t their long-term plan?
Jumbo mortgage products - 15 year, variable 30 year, or the 30 year fixed jumbo mortgage - can be beneficial. An honorable mortgage lender with experience financing jumbo mortgages is a buyer's best resource for determining which product is right for them.
This article is written by J.B. of 1st American Mortgage and Loan, LLC, a Colorado mortgage lender who offers access to information on obtaining a Colorado mortgage loan as well as other information on loans inColorado online mortgage quotes, and rates through his website TrueMortgageQuote.com http://www.truemortgagequote.com).
Infobrink Directory
Add your link here!!!!
|
Error: no links to display
|
|
|
