What is a Jumbo Loan?
Simply put, it is a mortgage home loan for more than the conforming limit already set by Fannie Mae and Freddie Mac. These loans are also referred to as non-conforming mortgage. Because jumbo loans are loans with a bigger limit than the loans that are already set by Fannie Mae and Freddie Mac (and guaranteed), they are also considered a riskier mortgage loan. The main difference between a jumbo loan and a conforming loan is the size of the loan just as its name suggests.
How does a Jumbo Loan typically work?
In most cases, a jumbo loan is typically available with either a fixed interest rate or an adjustable rate and they come with specific terms which your Loan Officer can go over with you in more detail. As explained, because the actual size of a jumbo loan is quite larger than other conforming loans, the rates of these loans are typically higher as well.
If a borrower defaults on a jumbo loan, it may be more difficult to sell a luxury residence quickly for full price. Because of all the risk that could be involved for this kind of mortgage loan, a jumbo loan may have a higher down payment requirement. Again, all these factors depend on various items, like your credit score and financial history. The best thing to do is to sit down with a qualified First Savings Mortgage Loan Officer and determine if a jumbo loan is right for you.
Could a Jumbo Loan Be Right For Me?
You should consider a Jumbo Loan if the following is accurate for you:
- You have a high credit score
- You are a high income earner
- You have solid financial history
- You're interested in a 2nd mortgage
- You have the proper funds for a down payment