Understanding Jumbo Mortgages
A jumbo mortgages is a home loan that exceeds the limits set by Fannie
Mae and Freddie Mac.
How are jumbo loans different?
What differentiates jumbo mortgage loans is the loan amount. At present, loan amounts that are higher than $417,000 are usually deemed jumbo mortgages. This determination is made by comparing industry standards for average housing loans as governed by the two biggest secondary mortgage lenders, Fannie Mae and Freddie Mac.
Fannie Mae and Freddie Mac set industry standards for ‘conforming loans’; Home loans beyond those maximums are regarded as jumbo mortgages. These two agencies cap the dollar figure for loans that they will buy (that’s where the $417,000 figure comes from). Larger loan amounts are funded by other investors such as banks and insurance companies. Note that the dollar figure set to qualify jumbo mortgages differs by locale, so the limit is higher in Hawaii and Alaska (and in some other states). In the majority of the U.S., jumbo mortgages are those larger than $417K.
Available Terms – 15 Year Fixed, 30 Year Fixed, or Variable 30 Year
Jumbo Mortgage
The terms for jumbo mortgages vary similarly to other types of housing loans. Buyers can choose between variable rates, like 3/1 or 5/1 ARMs, for a 15-30 year jumbo mortgage, or a 15 or 30 year fixed jumbo mortgagerate.
Whether a 15 or 30 year fixed jumbo mortgage or an adjustable rate is best for you will depend on your plans and situation.
A 30 year fixed jumbo mortgage is better for those whole plan to own the home for a very long time. With this type of mortgage, the rate will not go up but it will never go down, either – it stays the same for the life of the loan. This is good because the payment is predictable, and cannot rise sharply if interest rates do. On the downside, the 30 year fixed jumbo mortgage rate is higher since lenders know they can never charge more than the original rate.
The lowest jumbo mortgage rate is usually an adjustable 30 year jumbo mortgage rate. Lenders understand their potential to benefit from increases in rates over time, so they are willing to lend at a lower rate in the beginning. Although, the lower rate won’t last. A variable 30 year jumbo mortgage rate will be fixed for 3 to 5 years, and then will adjust annually according to an index. Even small increases could mean significantly larger monthly mortgage payments.
Going with an adjustable 30 year jumbo mortgage rate works well when a buyer plans to move within the 3 to 5 year fixed period. For a buyer more concerned with smaller initial payments, or who will likely refinance in the near future, the variable 30 year jumbo mortgage rate is better than the 30 year fixed jumbo mortgage. Why pay the higher fixed rate when the buyer knows this isn’t their long-term plan?
All jumbo mortgage products – 15 year, variable 30 year, or the 30 year fixed jumbo mortgage – have their benefits. A trustworthy mortgage lender with experience financing jumbo mortgages is a buyer’s best resource for determining which product is right for them.
Watch the video related to finance loan mortgage
In this video that is part of a series, Mr. Fed analyzes the vitally important recent speech by former Federal Reserve Chairman Paul Volcker concerning the massive dislocations in the financial markets, which Mr. Volcker describes as “the mother of all crises”. mortgage Lehman Fannie Mae Freddie Mac monoline inflation hyperinflation Ron Paul gold silver Fannie Mae Freddie Mac … subprime stock crash recession Friedman Stearns politics Fed Lehman Citi Obama crisis gold hyperinflation Volcker …
Help answer the question about finance loan mortgage
Can anyone help or have an advise with mortgage/loan problems?Im stuck with this called ARM loan,my home is going down value wise and my loan is going up as I am only paying the minimum monthly interest to my 100% financing loan.I think im sinking,should i sell it or if it would be sold,it might not even cover my whole loan as the housing market sucks. (From San Jose California)
About Author
This article is written by J.B. of 1st American Mortgage and Loan, LLC, a Colorado mortgage company.
Posted on May 20, 2009 | Under Finance Loan Mortgage | 9 Comments
Related Articles:- What to Expect From a Jumbo Mortgage Loan
- Jumbo Loans and White Elephants: Will the Pace Pick Up?
- Commercial Business Loans Uk: is This What you are Looking For?
- Loan Guru: Adjustable Rate Mortgages – How They Work
- Homecomings Loan Modification
Comments
9 Responses to “Understanding Jumbo Mortgages”
Leave a Reply
consolidate debt in uk
More consolidate debt in uk Resources at:
http://www.creditcarddebtguidesite.com/3/consolidate-debt-in-uk.html
Ask the mortgaging company to provide you with an Amortization Schedule that shows principle and interest. They can just print it out off their computer.
I wish I had watched this vid back when it was put onto youtube!
MrFed : Seen ALL of them up to this one so far.
Very interesting and a brilliant series of economic mini-lectures.
I think everyone knows what hyperinflation looks like, the image of wheelbarrows of money to buy bread, but what would make good visual shorthand for hyperdeflation?
This will be the year of the Stock Market Crash. 2008!
Countrywide or Wells Fargo
no repair no reform. just goodridence to money.
You should have at least $2,500 available for any little odds and ends. Things like inspections, termite reports, any lender fees, points, etc. will show up at the closing. You are entitled to a Truth in Lending form that will tell you exactly what you will be paying at closing and what the seller will be paying. Ask your realtor to help you with a ballpark estimate.
Congrats on getting the mortgage and on being able to buy a house!
Typically the only way to do this is through 2 seperate functions 1 is to get a home equity loan for the amount you need in order to pay off the remaining debt for your auot and credit card debt and then #2 would be to take out a home loan to get the 2nd half of your double wide. I can see that in some instances getting a new double wide would be a good risk but I am sure that you find it is worth while so that is #1. As to a single function in working with a bank that you could do I cannot think of one. My best advice would be to go speak with a personal banker at your bank of choice to see if this would even make sense as far as your monthly payments or overall financing needs.
Good luck