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What to Expect From a Jumbo Mortgage Loan.
What to Expect From a Jumbo Mortgage Loan
A jumbo mortgage loan does not differ drastically from a standard property mortgage, but there are a few key differences worth understanding.
Jumbo Mortgage Loans
A jumbo mortgage loan is one taken for a top-dollar property. Both in Colorado and most of the United States, a jumbo mortgage loan is any mortgage that exceeds $417,000 - the limit set by Fannie Mae and Freddie Mac for conforming loans.
Fannie Mae and Freddie Mac, the two agencies that buy the majority of real estate mortgages, will not buy a loan for an amount greater than $417,000 in most parts of the country (Hawaii, Alaska, and a few other territories. Therefore, the large jumbo mortgage loans are sold to other investments, often banks and insurance companies, and so ajumbo mortgage loan falls into a different category. Jumbo mortgage rates are higher because they are not guaranteed by government agencies, so they are riskier.
What This Means for Jumbo Mortgage Interest
Since jumbo mortgages are for higher loan amounts, there is more to lose. The size, coupled with other factors, results in somewhat higher jumbo mortgage rates than those carried by conforming loans. Since percentage points on jumbo mortgage rages can mean sizable payment differences, buyers need to shop for good lenders when applying for a jumbo mortgage loan to get the best jumbo mortgage interest rate. Buyers need to shop for good lenders when applying for a jumbo mortgage loan to get the best jumbo mortgage interest rate.
In reality, rates are only one you should factor in when shopping for a jumbo mortgage loan. There are closing costs and fees to consider that might even out the difference in rates. Occasionally, the lender with the higher jumbo mortgage rates will actually be the least expensive overall.
Buyers should also consider their future plans, goals, and other options that may be available to them. Just like conforming mortgages, jumbo mortgage loans come in a variety of products. Buyers can choose from loans with adjustable rates- with three or five year locked rates that will adjust after the selected period, or fixed fates at 15 or 30 years.
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 in Colorado, online mortgage quotes, and rates through his website TrueMortgageQuote.com