Learn More About Texas Jumbo Mortgage Loans
Home loans for any amount that surpass conforming loan limits which regulations establish are called jumbo mortgages. For much of the United States, the limit for jumbo loans is $417,000. If you’re looking for a loan amount that is in excess of the conforming loan limit of your region, then a jumbo mortgage is what you would do. So, for the majority of the nation, any loan amount over $417,000 is going to mean you need a jumbo mortgage.
Another name for a jumbo mortgage is a non-conforming mortgage. These are the kinds of loans that lenders offer borrowers who don’t ‘conform’ to Freddie Mac and Fannie Mae guidelines. These two organizations were creations of Congress, one in 1970 and the other all the way back in 1938. The purpose of these establishments is providing both affordability and stability in the mortgage marketplace, as they buy ‘conformist’ mortgages from lenders, which in turn provides the liquidity lenders need to offer even more mortgages.
In the most expensive regions, jumbo loans have an upper limit of $625,500. However, most of the contiguous United States sees a limit of $424,100. Do note that areas with high home prices sometimes see higher conforming limits. At the time of writing, the highest of these areas had a jumbo limit of $636,150.
If you have set an intention to get a home that is going to cost you half a million or even more, and your bank account is not that big, then you’re likely going to need a jumbo mortgage to get the deal done. As you look for one, you’ll find that the credit criteria are far more robust, as compared to homeowners doing a conventional loan. The reason for this is because jumbo loans involve higher levels of credit risk for lenders, as they are not guaranteed by Freddie Mac or Fannie Mae, and there’s also a lot more money involved.
A jumbo mortgage means you don’t have to take out more than one loan. It simplifies the process of home buying, which is admittedly usually pretty complex. Previously, a borrower might have needed two lenders in order to buy a home. One mortgage is often overwhelming enough. Can you envision juggling two of them?
Banks have been lately easing the lending criteria for jumbo mortgages, especially in terms of the minimum credit scores needed.
If you are considering a jumbo loan for any investment property, then you’ll have to personally take care of both closing costs and the down payment. Given that mortgage insurance is rarely available for things like investment properties, you’re probably facing a minimum down payment of 20 percent. Some institutions will go as low as 5 percent however. You might also be required to demonstrate 2 years of personal experience in property management in order to qualify your property for the rental income category.
Jumbo mortgages are not commodities, so do shop around when looking for one. Most of them are offered by the larger banks which keep them on their own books instead of selling them. Also known as ‘portfolio loans,’ these are demonstrative of old-fashioned lending methods, where the banks make profit from charging higher rates of interest on their mortgages than they pay on customer savings deposits.