When you decide it’s time to find yourself a new home or possible refinance, finding a jumbo mortgage lender serving Austin TX and the surrounding areas isn’t always the easiest task. If you’re set on a larger than usual home with a hefty price tag, you may need an especially large financing package to make the deal work. This is where jumbo home financing comes in.
Austin Jumbo Loans
The name is a strong hint as to its distinguishing characteristic: It’s bigger than a conventional mortgage. These sorts of loans are designed expressly to meet the needs of borrowers making especially high-value home purchases.
So the next obvious question is, exactly how “high value” does a home have to be? Unlike some real estate terms, this one is very objectively defined. The default starting cost for a deal that qualifies for a jumbo home loan is set at $424,100 in most parts of the United States. There are certain especially pricey regions where this bar is set higher. In Los Angeles, for instance, the jumbo loan minimum is $636,150.
The prime appeal of the this type of mortgage loan is, of course, to make the purchase of big, pricey home easier for the buyer. It’s an alternative to accumulating excessive savings, liquidating other assets, or scraping together your funding by taking out multiple loans. It basically lets you finance your home in one all-inclusive package.
There’s even a super-sized version of the jumbo mortgage. The super jumbo loan typically comes into play when you’re purchasing a home valued in excess of $650,000. It is less rigidly defined than the regular jumbo, with individual lenders setting their own terms and specifics.
Requirements For A Jumbo Loan
These larger than life loans are most useful to home buyers who have the income necessary to support larger mortgage payments. Both the requirements for and advantages are rather different than those of a conventional “conforming” mortgage. These differences are all ultimately tied to the fact that issuing a loan for a high-value property is generally riskier for the lender.
Just as with a conforming loan, you’ll need to verify that you have adequate income to cover the proposed monthly payments. Lenders also look for a low debt-to-income (DTI) ratio. As a rule of thumb, this ratio can’t be any higher than 38 percent if you want to qualify. Specific DTI requirements vary from lender to lender, but close scrutiny of this figure is a universal requirement of taking out this type of non-conforming loan product.
Lenders will also want to see a strong credit score from jumbo borrowers. While this requirement also varies from lender to lender, here the general guideline is to make sure you have a credit score above 680 before you begin applying.
Down payment requirements are set by the lender on a case-by-case basis, and the percentage chosen usually reflects the total purchase price of the home. Down payments typically start at five percent for home prices in mid-six figures. This percentage rises to 10 percent when the cost of your home passes one million dollars, and multi-million dollar purchases typically require down payments of 20 percent.
Verifying your financial resources is a thorough and careful process when you are preparing for a purchase this large. Your lender will examine your overall liquid assets to confirm that you’re capable of taking care of your down payment, your closing costs, and your ongoing mortgage payments. Asset reserve requirements are probably the area where jumbo financing providers vary most significantly. Some lenders may be happy with six months of verified reserves, while others might look for five years. The “magic number” may also vary according to the size of the loan you’re seeking.
Across the board, interest rates charged are higher than those associated with conforming loans. This is due to the increased risk assumed by the lender. Besides the sheer value of the asset, there’s also the smaller market for the potential resale of the home. It is more difficult to predict the future resale value of a high-priced home as real estate market fluctuations will impact it more severely than an average home. Lenders charge extra interest in order to protect themselves from these uncertainties.
Picking A Jumbo Mortgage Lender Serving the Austin Area
Your search for the right lender shouldn’t be that different if the size of your prospective home is big enough. For a start, work with a realistic, well-defined budget, just as you would if you were seeking a conforming loan. You can save yourself a significant amount of time by using online resources to check the requirements on jumbo loans imposed by specific lenders. This way you won’t have to go through the hassle of inquiring and applying with a lender who is likely to turn you down. By clearing out non-feasible options in advance, you can keep your overall list of potential lenders short and easy to manage.
Choosing the perfect lender largely depends on your specific requirements. Banks are likely to be your first “go-to” thought for all forms of financing, but your local bank may not be the optimal choice for handling this niche loan product. Because of the sheer breadth of the financial options they offer, banks as institutions rarely have the depth of experience that can be offered by a specialized lender dealing exclusively in mortgages.
Service also matters if you find yourself in a position where fast decision-making is important. A responsive lender that makes customer service a top priority is more likely to respond to your inquiries and instructions rapidly. This can be an absolute necessity if you need to close your purchase deal quickly.
Any buyer who is in the market for a high-value home is likely to appreciate the extended financial resources that lenders make available in the form of jumbo mortgage loans. With the right financial groundwork, a jumbo mortgage home loan can ease the hassles of a high-priced home purchase and simplify the process considerably. An experienced lender who is familiar with jumbo loans can get the process rolling quickly and painlessly.
Additional Helpful Information
Local communities we service in the Austin, TX area:
Austin, Bee Cave, Briarcliff, Buda, Cedar Creek, Cedar Park, Creedmoor, Dale, Del Valle, Driftwood, Kyle, Lago Vista, Lakeway, Leander, Manchaca, Manor, McNeil, Pflugerville, Red Rock, Round Rock, Spicewood, Sunset Valley, West Lake Hills
Bastrop County, Caldwell County, Hays County, Travis County, Williamson County
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