A Jumbo mortgage might sound like it’s a major deal or something only reserved for millionaires, but that’s not the case. It might be a bigger debt than what most house mortgages are, but a jumbo loan is definitely your best choice, of course, that depends majorly on your income, too, when it comes to the price of the home that you have your eyes on and the loan options available to you.
Here are some pointers to help you know what a jumbo loan is, how to get one and whether it’s a smart move to make.
What is Jumbo Loan?
A jumbo mortgage, also known as a jumbo loan, is a mortgage that goes over the limit conforming the normal loan limits that are set by the Office of Federal Housing Enterprise Oversight. By not submitting to loan limits, you can have a lot of freedom with your loan funds.
How Do You Qualify for Jumbo Loan?
Eligibility for a jumbo loan generally depends on income, credit score, debt, employment, status, cash reserves, and property use. Qualifying to get a jumbo loan is a bit more complicated than getting a conforming loan. Since it is a loan that falls outside of the jurisdiction of the government, the lender has to handle financial risks in other ways. Jumbo loans are handwritten.
If your application is weak in one aspect, you can easily make it up by making another element stronger. Like, if your credit score is low, you may qualify with a larger down payment.
What is Credit score and how does it affect jumbo loan?
For a jumbo loan, the credit score is higher. For this type of loan, your credit score must be at least 680 or even 700 to 720 or sometimes even higher in some cases, whereas a conforming loan takes a credit score of 500 into account.
Your credit score generally shows your loan amount, the size of the down payment and the debt amount that you carry. A credit score that is on the low side is not a huge barrier to qualifying for a jumbo loan. Although it is offered to people who have a higher credit score, many industries are made to cater to borrowers having a low credit score.
Where Can You Get a Jumbo Loan?
Many mortgage lenders take loans that are above the conforming loan limitations. Investment banks have a tendency to have the most competitive rates on jumbo loans. A lender with a very high credit score may offer a jumbo loan to a borrower who has had a huge loss in order to be able to market other financial products to make a profit.
What you can do is, talk to experienced lenders or a broker who can ask around many lenders at once, to get a better insight.
Some borrowers are entitled to specific and unique loan programs that are according to their professions like licensed doctors and dentists. This particular program is available with a jumbo loan.
Also Read- Difference Between a Loan and a Lease