Don’t underestimate the importance of your interest rate, because it can make a significant difference in how much you pay for your jumbo loan. Not everyone wants to get a jumbo loan, of course, but for people who are buying property that needs a mortgage higher than $417,000, a jumbo loan is one of the few options they have. Fortunately, jumbo mortgage rates are reasonable in many cases, allowing a buyer to get into the home they really want without the need to pay out a huge sum of money in interest every month. With the large amount of the loan, a high interest rate on top of that would make the option completely unaffordable for many people.
1). Are jumbo rates lower than conforming loans?
The rates for jumbo loans are often at or below the rates for conforming loans. That’s important for buyers who want these larger loans, since they know that one of the best ways to keep their payments down is to focus on getting a loan that’s got a great interest rate. The lower the rate of interest they have to pay, the more money they can save and the more easily they can afford the loan. With a large loan the bank still makes money off the interest, even if the rate of that interest is a little bit lower than other loans.
2). Do all lenders have the same jumbo rate?
When you’re purchasing a home, it’s a good idea to shop around as much as possible. That way you can find the loan you need, and it just might be a jumbo loan. It’s not just the loan that matters, though. It’s also the lender. Not all lenders are created equally, and if you find one that’s charging you too much for your jumbo loan you may decide that it’s a good idea to find a different one. Since not all lenders will charge the same jumbo rates and fees, it’s well worth asking more than one lender about their practices.
3). How do rates differ around the country?
In some parts of the country where home prices are very high, conforming loan amounts are also larger. In those cases, a jumbo loan won’t start until you reach a mortgage amount of $625,500. In the rest of the country, the amount is $417,000. The rates, then, may also be affected based on where the conforming loan ends and the non-conforming, jumbo loan begins. Rates can be very different around the country, as well. In more rural areas, rates are typically a bit lower along with the house prices. However, any lender can charge a different rate, so asking around is key.
4). Do you have to get a 30-year loan?
When you’re buying a house, you generally figure on a 30-year mortgage. That’s the standard for most people, and the easiest and best way for them to be able to afford their mortgage payments. You can expect to get the best rate on a jumbo loan when you choose a 30-year option. Getting a shorter time financed on a jumbo loan isn’t always easy, mostly because the amount of the payments would rise to a point that the majority of people wouldn’t be able to make them. Instead of taking that risk, lenders expect to finance jumbo loans for 30 years.
5). Will jumbo rates remain stable?
While jumbo loans aren’t as common as conforming, traditional loans, their interest rates have been very stable over time. There’s a bit less fluctuation in these rates than their is in other mortgage loan rates. Still, the market does dictate jumbo loan rates to some extent, and rising rates will eventually mean that jumbo loans will see their rates rise, as well. That’s worth considering when you’re deciding if now is the time to apply for that jumbo loan, or if you feel that waiting may be to your advantage.
6). Who can qualify for a jumbo loan?
People who qualify for a jumbo loan at the lowest rate of interest have high incomes and very little debt. Even a person who makes a lot of money can be turned down for a jumbo loan if they have too many debts. It’s all about the debt-to-income ratio (DTI), along with the credit score. People who have very high credit scores and nothing negative on their reports can qualify for the lowest rates on jumbo loans, provided they have the income to pay for the property and don’t have a lot of debt that could keep them from getting the loan amount they want.
7). Are there requirements on the type of property?
With the right jumbo mortgage rate, you can get into a great home and have a payment you feel good about. That’s true of a single family home, and also true of other types of property. Some people use jumbo loans to buy investments, such as apartment buildings. They do that because of the cost of the property, but also because they know they can get a good rate, which keeps their costs down and helps their investment dollars work for them. No matter whether you’re buying as an investment or you simply want a great house to call your own, getting a jumbo loan with a great interest rate can be the way to go for buyers who have the means to qualify.
2 Point Highlight
With the right jumbo mortgage rate, you can get into a great home and have a payment you feel good about.
Don’t underestimate the importance of your interest rate, because it can make a significant difference in how much you pay for your jumbo loan.
