What Is a Jumbo Loan and Do You Actually Need One?
For many of us, a conventional loan or similar gives us enough money to fund a home. However, for a handful of people, the loan limits might be just a little too low. If you feel this way, then we recommend looking at jumbo loans. As the name implies, these loans allow you to borrow a lot more money than a conventional loan. However, it does not come without challenges. If you wonder what exactly a jumbo loan is and whether you need one, you are in the right place.
What is a jumbo loan?
Also known as a jumbo mortgage, this loan is designed for those who need to borrow money higher than the traditional lending limits. Other people also call it a non-conforming loan because it does not conform to the Fannie Mae and Freddie Mac standards.
You can finance your purchase of primary, secondary, or vacation homes with these loans. They are also viable for investment properties and come in fixed or adjustable-rate loans. There are plenty of options for borrowers to save as much money as possible.
What are the requirements to obtain a jumbo loan?
A jumbo loan’s qualifications will depend on the lender, but they are generally stricter than conventional loan requirements.
The first and most apparent example of this is in your credit score. The credit score requirement for jumbo loans is much higher, requiring a minimum of 680. More considerable sums mean more risk on the lender's side, so they need to work with responsible borrowers. Other examples include much higher interest rates, low debt-to-income ratios, and larger down payments. These requirements combined make it much harder for you to secure a loan, but it is not impossible.
Do you need a jumbo loan?
A jumbo loan is not for everyone and makes sense for only a few people. Loan limits can differ from one place to the other. For instance, $500,000 is roughly the standard limit, while some places can go up to $750,000 or slightly higher depending on the average cost of real estate in the area.
However, a jumbo loan can make sense for those looking to purchase large or luxury properties. Essentially, anyone looking to buy a home priced way higher than the normal limits may have to get one of these loans, provided they have the means to satisfy the requirements.
HI Velocity Mortgage: Your Jumbo Loans Expert in Ewa Beach
Jumbo loans are an excellent choice if you are looking to purchase homes priced way higher than the conforming limit. However, there are some considerations to be made. You need to arm yourself with a higher credit score and prove that you can take on this financial commitment. You will also face more stringent screening processes throughout your search for this type of loan.
If you need help looking for mortgage options to fund your home, do work with a mortgage broker to look for the best choices possible. They will help you identify the best deal possible while still enabling you to purchase your dream home.
HI Velocity Mortgage is a mortgage broker dedicated to helping people purchase their dream home. If you are looking for a jumbo loan in Ewa Beach, reach out to us today at (808) 727-1055.