Jumbo Loans
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A jumbo mortgage loan or jumbo loan is a mortgage with a loan amount above the industry-standard definition of conventional conforming loan limits.Jumbo loans are now required in many of the high priced cities across the country. As home prices have increased, more and more borrowers are using jumbo loans to afford their homes.
Home loans that are over 1 million can be classified as a Jumbo or super Jumbo loan and have interest rates that are higher than conforming loans. These mega-million dollar loans will be effected by the loan to value ratio and the amount of cash taken out for a refinance.
Many companies offer automated underwriting for Jumbo Loans just like conforming loan amounts. Many times there is little difference between jumbo loan financing rates and conforming loan rates with a high quality loan. Lower quality jumbo loans, however, are difficult to finance.
Jumbo mortgage loans are above the conformming limits and may be offered by seller servicers of these wholesale institutions, as well as Wall Street conduits who provide warehouse financing for mortgage lenders.
Jumbo Mortgage loan amounts reflect average loan sizes nationwide. Jumbo mortgages apply when agency Fannie Mae and Freddie Mac limits don't cover the full loan amount.
As of 2006, the conforming loan limit is $417,000, or $625,500 in Alaska, Hawaii, Guam, and the U.S. Virgin Islands. Any mortgage amount great than this is considered a Jumbo Loan or Jumbo Mortgage.
Many Jumbo loans are portfolio mortgage loans that are not sold by the lender. Because of such, the interest rates on jumbo mortgages are typically greater than is normal for conforming mortgages, and vary depending on property types and mortgage amount.
Today's jumbo loan market gives significant preference to borrowers who are able to full document, through a variety of flexible options, all of their income and assets.
Most super jumbo clients in my experience don't want full doc because it's too time consuming and almost impossible to keep organized. Most are self employed. Usually if they have over a 720 FICO it's easier to take them SIVA.
Most Reputable Mortgage Brokers have relationships with other large investors, such as insurance companies and banks, which step in to fill the need, with maximum mortgage amounts going to the $1 million or $2 million range. These larger loans are known as super jumbo loans.
Jumbo loans will usually have a slightly higher interest rate than "normal" conforming (non-Jumbo) mortgage loans. One reason being is because they can be considered a higher risk loan for a lender because of the much larger value the lender is lending to a borrower for a mortgage that is classified as a Jumbo Loan. Therefore, if you are comparing rates between mortgage companies make sure that you are receiving quotes for "Jumbo" rates and not just standard conforming rates.