What is a jumbo loan and is it right for your next purchase?
A jumbo mortgage is a home loan in an amount that exceeds what is called the conforming loan limit, as set by regulation. Are you a candidate for a jumbo loan?
Candidates for jumbo mortgages
- Make a lot of money, have a great credit score, and boast a low debt-to-income ratio.
- Do not have a nest egg yet to satisfy a large down payment.
- Live in a high-income county, such as Hawaii or New York City, where the threshold is greatest.
- Are in the market for a luxury home.
- Have enough liquid cash on hand to cover anywhere from three to 24 months of mortgage payments.
- Understand and are comfortable with the greater risk and potentially higher interest rates involved in a jumbo loan.
Jumbo loans are unique
Because of the greater amount of risk involved, the requirements to take out a jumbo mortgage are tighter. The interest rates may be greater, but not necessarily. In general, you will need to make a larger down payment than you would with a conforming loan, and also deal with higher closing costs. But there are advantages. For instance, jumbo loans may not require private mortgage insurance.
- Jumbo loans are ideal for:
- Luxury, primary residential properties
- Vacation home or secondary residences
- Investment properties
- What’s the next step?
Ready to speak with a lender about obtaining a jumbo mortgage? Reach out to Golden Oak Lending today. Some of the paperwork you might want to have ready includes tax returns, bank statements, and 1099s. We will be happy to answer all of your questions and set you on the right path to moving into your luxury dream home sooner rather than later.