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Perks And Drawbacks Of Jumbo Mortgages

Most home buyers go for traditional mortgage mainly because of the attractive rates that will enable them to make a home purchase. However, this can mean you are buying a house, but not the home of your dreams. If you want to buy a house by taking in a home loan that allows you to borrow more cash than what a conforming loan has to offer, then what you need is a Jumbo Mortgage.

Jumbo loans do not conform with the loan limits set by Government Sponsored Entities like the Fannie Mae and Freddie Mac. This means you will need to find a private mortgage lender to buy a more expensive home. They have their own rules and criteria for approving the loan. Jumbo Loans are called like so due to their large loan balances made available to borrowers.

If you’re considering Texas Jumbo Loans, make sure to learn about the following perks and drawbacks.

You Can Purchase A High-Value Property.

The funds you can get from a Jumbo Loan are much higher than conventional loans. The traditional loan limit is up to $484,350 in most US states. If the house you want to buy is a lot more expensive and exceeds this amount, you can buy it after getting approved for a Jumbo Mortgage.

Lenders Usually Charge A Higher Interest Rates.

With a large amount of loan balance at stake, lenders will usually charge higher interest fees compared to traditional home loans. However, there are others who can offer you competitive interest rates so make sure to shop around for lenders.

This Mortgage Type Is For You If You’re Part Of The HENRY Segment That Has A Solid Financial History And An Excellent FICO Score.

Not all homebuyers and borrowers are High Earners, Not Rich Yet and can afford jumbo loans. However, for the lucky ones who already have a healthy financial history and already built an excellent credit history and FICO score, then jumbo loans may be the right type of mortgage for you.

You Need To Save At Least 20% Down Payment To Qualify.

If you want to avail jumbo mortgages, make sure you’ve got enough funds saved up to cover for the 20% down payment. Most lenders will require 20% down, but there are still some who will permit less than 20% down payment without Private Mortgage Insurance.

Get The Flexibility When It Comes To Rate Programs.

Jumbo Loans can either be fixed-rate mortgages or adjustable-rate home loan. Depending on your needs, you can negotiate with your lender and agree on which rate programs will work best in your favor.

It Can Be Hard To Refinance A Jumbo Loan.

Jumbo mortgages are non-conforming loans. This means it can be difficult if you hope to take advantage of lower rates by refinancing the mortgage in the future.

Good Read: Differences Between ARM and Fixed Rate Mortgages

Manage A Single Mortgage To Buy Your Dream Home.

Some homebuyers would go for two or more loans to buy the house they want. With a Jumbo Loan, it’s all you ever need for a convenient dream home purchase.

If you have the financial means to qualify for jumbo loans, and your dream home cost more than what traditional mortgage limits has to offer, then you must consider applying for a Jumbo Mortgage. It may have its drawbacks, but with proper planning and budgeting, you can buy the kind of house you want and deserve.