For many that are just beginning to look into a home for the first time, there is a whole new world of terminology, principles, and rules to learn in order to successfully navigate the waters of homeownership. For those new to homes, loans and mortgages, learning the basics of jumbo loans and requirements and why they might be the right choice for you.
What is a Jumbo Loan?
A jumbo loan is essentially a large loan used in buying a home. It is larger than a normal loan and has therefore earned the name, jumbo loan. Jumbo loans are typically used to finance larger homes, as the amount of a jumbo loan is over about $550,000. Conforming conventional loans typically have a limit of $548,250. When a home exceeds that value, a jumbo, or nonconforming loan must be used. However, this dollar value fluctuates according to the area. Higher income locations could have a higher threshold for jumbo loans. Jumbo loans have no ceiling or limit.What are the Requirements for a Jumbo Loan?
Because jumbo loans are riskier for lenders, there are a number of different requirements that serve as safeguard for providers which are:- Down payment of 20% or greater
- Debt-to-Income ratio around 40% or less
- Property appraisal, possibly two appraisals
- Closing costs, typically well over $10,000
- Consistent income that you can document with tax records and bank statements
- Credit score of around 700 or even greater
How to Select a Provider?
There are many jumbo loan providers that it can be hard for homeowners to discern who to select. As with any significant financial decision, taking the time to think through the various options is always recommended. It is wise to communicate and see rates for different providers so you have a complete understanding of what is available. Using a jumbo mortgage rate forecast or jumbo loan calculator are a smart option to get a general idea of what you could be looking at. Jumbo loans can be a great choice for some homeowners. It just takes a bit of research to know if they are right for you.Latest Articles
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