Jumbo mortgage loans are a type of home loan that exceeds the maximum loan limit set by government-sponsored entities such as Fannie Mae and Freddie Mac. This limit varies depending on the location of the property, but in general, a jumbo loan is any loan that exceeds $726,200 for a single-family home in the contiguous United States.
Eligibility for Jumbo Mortgage Loans
To be eligible for a jumbo mortgage loan, borrowers must have a strong credit score, a low debt-to-income ratio, and a substantial amount of assets. Jumbo loans are generally only available to those with high incomes and good credit.
Borrowers must also have a substantial down payment, usually 20% or more of the purchase price of the home. This is because jumbo loans are not backed by the government, and therefore, lenders require a higher down payment to mitigate their risk.
Benefits of Jumbo Mortgage Loans
One of the biggest benefits of jumbo mortgage loans is that they allow borrowers to purchase a more expensive home. This is because the loan limit for jumbo loans is higher than the loan limit for government-sponsored loans, allowing borrowers to purchase a home that exceeds the maximum loan limit for conventional loans.
Another benefit of jumbo mortgage loans is that they often offer lower interest rates than other types of home loans. This is because jumbo loans are considered to be less risky for lenders, and therefore, lenders are able to offer lower interest rates to borrowers.
No Private Mortgage Insurance (PMI)
Jumbo mortgage loans do not require private mortgage insurance (PMI), which is often required by conventional loans if the down payment is less than 20% of the purchase price of the home. This can save borrowers hundreds of dollars each year and make it easier to afford a home.
To be eligible for a jumbo mortgage loan, borrowers must have a strong credit score, a low debt-to-income ratio, and a substantial amount of assets. These loans offer many benefits, including the ability to purchase a more expensive home, lower interest rates, and no private mortgage insurance requirement. If you are looking to purchase a more expensive home and meet the eligibility requirements, a jumbo mortgage loan may be a good option for you. It is important to work with a knowledgeable mortgage lender to find the best solution for your needs.
Linda Benningfield is a professional mobile notary, loan signing agent, and apostille facilitator living in the beautiful Pacific Northwest. Linda is also an independent associate for LegalShield / ID Shield providing affordable protection plans to individuals, families, and businesses.
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