If you want a good interest rate and terms, you may want to consider a jumbo mortgage. These are typically designed to pick up where traditional, conforming loans leave off. Throughout most of the country that’s $417,000, while in some of the most expensive areas it’s $625,500. That means you can’t get a traditional loan for anything over that amount, so you need a jumbo mortgage instead. Buying a property that expensive works the same way as purchasing something for a lower price, but a jumbo loan also has the opportunity to save you money. If done right you can get big savings from this kind of loan, simply because it has some favorable interest rates and terms to offer you, along with a few other significant perks.
1). What kind of rate can you get?
The interest rate for jumbo loans is often one of the things that’s most attractive about them. Many people might think that the rate would be higher because of the size of the loan, but that’s generally not the case. Lenders generally provide jumbo loans at the same rate or a lower rate than they offer more traditional loans. You can save a lot of money by not having to pay a higher rate of interest, and the people who get loans of this size generally get the best rates because they need a high income and good credit score to qualify. If you want a jumbo loan you’ll need to be sure you’re approved, and then you can move toward the closing process and lock in a great rate that can keep your payment low, even on such a large loan.
2). Will you get good terms?
If you’re buying a house, the terms you agree to will matter. You need a home that you’re going to feel comfortable buying. The same is true if you’re using your jumbo loan to get a multi-family home or an investment property. With a jumbo loan, you can generally expect to get good terms. That saves you from the expense of having to shop around or try to raise the money some other way, and can keep your costs down while you move through the process and head toward closing. If you don’t feel the terms of a jumbo mortgage favor you, work with your lender for something that’s a better choice. You can always choose another lender, as well, although not all of them will offer jumbo loans in your area.
3). Are there high fees with a jumbo loan?
For the most part, you can expect to save money on fees with a jumbo loan, as well. These are relatively straightforward loans, and lack some of the frustration that can come along with a traditional loan. That’s not to say they aren’t without their difficulties, but you can generally expect to pay only standard types of fees, just like you would pay if you were getting a traditional, conforming loan. Some fees on a jumbo loan may be a bit higher if they’re based on the amount borrowed, but for the size of the mortgage they’re aren’t excessive or out of line. You shouldn’t expect to pay more than you were really planning to, or be hit with a lot of fees that you didn’t see coming. That’s generally not the way these types of loans work, because lenders know that a jumbo option is for the serious and well-qualified buyer.
4). Can you stretch it out over 30 years?
With the purchase of a home, most mortgages are for 30 years. The jumbo loan is no different. While you can always pay it off sooner, you should expect your loan to be for a 30 year period just like its conforming counterpart. That can help to keep your payment reasonable, even though your loan amount will be high. The more you can put down on the property the better, but there are times when you don’t want to put a lot of money down. In some cases, it may be smarter and more financially savvy to finance the largest amount possible for the longest period of time. That all depends on how the money you would use for a down payment is already working for you, since you don’t want to disturb it if you’re making a good return on your investment.
5). How does a jumbo mortgage mean more money in the bank?
While a jumbo mortgage isn’t for everyone, some people can really benefit from them and save a lot of money in certain circumstances. For example, if you have a lot of investments but you want to buy another property for yourself or to increase your portfolio, you can save money by getting a jumbo loan at a very low interest rate. The money you have in the bank and other investments will be providing you with a higher rate of return than the rate you’re paying out on the loan, so you’re actually making more money by using the loan instead of paying for the property with other funds. It’s one of the best ways the jumbo mortgage can save you money, whether you’re a real estate investor or you just want to keep your assets where they are.
2 Point Highlight
If you want a good interest rate and terms, you may want to consider a jumbo mortgage.
While a jumbo mortgage isn’t for everyone, some people can really benefit from them and save a lot of money in certain circumstances.
