Jumbo Mortgage Loans - Things You Should Know
Below is a MRR and PLR article in category Finance -> subcategory Wealth Building.
Jumbo Mortgage Loans: Essential Information
Summary:
A jumbo mortgage is a loan that exceeds the typical conventional limits. Essentially, it caters to those seeking higher loan amounts than standard conforming loans, which adhere to secondary market agencies' underwriting requirements.
Key Information:
Jumbo mortgages are necessary when borrowing exceeds standard limits. These limits are defined by conforming, conventional loans, which follow rigorous underwriting guidelines, including credit and income verification and property analysis.
As of February 20, 2007, the maximum conforming loan limits were set at $417,000 for a single-unit property, $533,850 for a two-unit property, $645,300 for a three-unit property, and $801,950 for a four-unit property. For second loans, the conventional limit is $208,500. In Alaska, Hawaii, Guam, and the U.S. Virgin Islands, these limits are 50% higher. These figures are subject to change based on the real estate market.
Lending beyond these conforming limits increases risk for lenders. This risk is reflected in higher interest rates compared to loans within conventional limits. Typically, you can expect interest rates on jumbo loans to be about 0.5% higher.
Lenders, especially those backed by Fannie Mae or Freddie Mac, maintain strict limits on jumbo loans. Therefore, a loan slightly over the conforming limit could see a noticeable increase in interest rates. For example, a $417,000 loan at 6% interest may increase to approximately 6.5% if the loan amount is $417,001.
Keywords: jumbo mortgage loan
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