What Is A Jumbo Mortgage And Who Needs One?

What Is A Jumbo Mortgage And Who Needs One?

A jumbo loan is a mortgage that exceeds the conforming loan limit set by the federal government. These loans—meant to finance expensive properties—cannot be purchased or securitized by the government-backed entities Fannie Mae or Freddie Mac, which increases a lender’s risk because it will have to hold onto the loan for longer. You’ll pay more for a jumbo mortgage than a conventional home loan, and you’ll have to meet tougher qualification guidelines.

The conforming loan limit is adjusted annually. In 2020, the conforming limit is $510,400 in most parts of the U.S., but can be as much as $765,600 in higher-cost regions.

Who Needs a Jumbo Loan?

Buyers who don’t meet the Fannie and Freddie loan limit restrictions are either expected to increase the amount of their down payment or find a lender that will offer a second mortgage for the difference so that they can get conforming loans, says Andrina Valdes, COO of Cornerstone Home Lending in San Antonio, Texas. Otherwise, the borrower will need to seek a jumbo mortgage loan click this link now.

A jumbo mortgage is a loan designed for a borrower who needs to finance a loan balance greater than conforming loan lending limits. The operative word here is “borrow” or “finance”—it’s not the purchase price. You might also hear a jumbo loan referred to as a non-conforming loan. Read More

What Are My Down Payment Options for New Homes?

What Are My Down Payment Options for New Homes?

Buying a new home is very exciting. Besides selecting the perfect neighborhood and making sure you get the best house for you and your family, there are lots of financial things to take into consideration. One of the most important things to plan for is your down payment. Home loans come in all shapes and sizes. Let’s go over the most common top three options borrowers choose.

Down Payment Option One – 3.5%

One of the least expensive ways to get into a new home is by taking advantage of an FHA (Federal Housing Administration) government loan. This type of mortgage only requires that you put 3.5% down. On a $250,000, that’s only $8,750, which makes getting into a home extremely affordable, especially for first-time homebuyers. One thing to keep in mind with an FHA loan is that you will have to pay monthly private mortgage insurance for the life of the loan. Private mortgage insurance (PMI) protects the lender in case of default – it’s not the same as homeowner’s insurance. This type of insurance is required when you put down less than 20%. But, even with the extra insurance, an FHA loan is still an excellent choice.

Here are the three top reasons so many borrowers choose this loan:

1. The interest rates on FHA loans are some of the lowest. Read More