Thanks to mortgage loans, people’s dream of owning a house becomes possible. Because of this financial assistance, many can begin their steps toward securing their dream home. With so many types of loans available, one might be wondering what a jumbo loan is about. This article will tell you what you need to know about this type of loan, including if it is a good loan for your needs and what to consider before filing for one.
What Is a Jumbo Loan?
The term jumbo refers to a mortgage loan that exceeds the maximum allowable loan limit for a particular region. These loans are offered to purchase homes that have relatively large values on the market.
Jumbo loans are usually granted for more than the $417,000 limit for purchasing a home in the United States, with the maximum loan amount varying from one lender to another.
What Is the Purpose of Jumbo Loans?
When homeowners are purchasing a home, they must pay a certain amount of money as a down payment. The purpose of jumbo loans is to help homeowners pay their down payment, allowing them to purchase their dream home. Due to their large loan amounts, jumbo loans are an excellent choice for these high-value homes.
Who Qualifies for Jumbo Loans?
Jumbo loans are usually offered by mortgage banks and are guaranteed by Fannie Mae or Freddie Mac. Because of these, you will have to follow the two parties’ guidelines. To qualify for a jumbo loan, you must:
–> Have a steady income for at least two years
–> Have a good credit history, score, and credit card history
–> Have a property that has been owned for at least one year
Once you have been approved for a jumbo loan, you can go ahead and apply for the money that you need to purchase your home.
What to Consider Before Applying for a Jumbo Loan
If you are planning on purchasing a home and want to secure a jumbo loan, you should consider the following things:
1. Appraisal Fees
If you are applying for a jumbo loan, you need to know that you must pay for an appraisal. The lender usually covers the cost of this appraisal.
2. Private Mortgage Insurance
If you have a jumbo loan, you will have to pay for private mortgage insurance. You will have to pay the insurance every month until you have paid your loan in full.
3. May Require a Higher Rate of Interest
If you are applying for a jumbo loan, you should know that you might be subject to a higher interest rate. Having a higher interest rate means that you will be spending more each month on your loan, so you have to be sure that you can manage the payments.
As the name suggests, the jumbo loan is a substantial loan that can help homeowners purchase their dream homes. It is a great financial tool that allows homeowners to buy luxury homes. Knowing what a jumbo loan is is good, but it is just as important to see if you are the right candidate for this loan. If you have a steady income, a good credit record, and a property that has been owned for at least one year, you could qualify for a jumbo loan and purchase your dream home.
If you are looking into acquiring jumbo loans or other types of mortgages in Colorado Springs, contact us at Total Lending Concepts. We offer home loans to fit every situation—whether you are a first-time homebuyer searching for your first home or you are ready to buy that dream home you’ve had your eye on.