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Jumbo Mortgage Loans
Author David Schneider | Dec 09,2007
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John and Sandy are looking at buying a home in California. They have relatively good credit and they both have stable professional jobs. However, when they talked with their bank they were told that the home they were interested in would not qualify for a traditional loan, even though the couple had all the qualifications to get one. The problem was that the home was valued at $750,000, and the cut off for traditional loans was around $417,000 at that time. If the couple wanted to qualify for a traditional loan, they would have to make a down payment of $333,000. This was out of the question. Fortunately, the couple had a second option, jumbo mortgage loans.
Jumbo Mortgage Loans -- What Is It?
A jumbo mortgage loan is simply a mortgage product that is used to finance properties with values over the cut off amount for traditional loans. This cut off value varies from state to state. However, it is generally under $500,000. These loans are particularly popular in states where the real estate market is extremely expensive such as California and New York.
Jumbo Mortgage Loans -- The Basics
Jumbo loans are not simply large traditional loans. They are a specialty mortgage that is designed especially for high value homes. Generally, they come with high interest rates and longer terms. For example, a couple may qualify for a 30 year fixed interest rate traditional loan with an APR of six percent for homes valued under $500,000 or a jumbo 50 year mortgage with a fixed APR of 7.5 percent for homes valued over $500,000.
John and Sandy are looking at buying a home in California. They have relatively good credit and they both have stable professional jobs. However, when they talked with their bank they were told that the home they were interested in would not qualify for a traditional loan, even though the couple had all the qualifications to get one. The problem was that the home was valued at $750,000, and the cut off for traditional loans was around $417,000 at that time. If the couple wanted to qualify for a traditional loan, they would have to make a down payment of $333,000. This was out of the question. Fortunately, the couple had a second option, jumbo mortgage loans.
Jumbo Mortgage Loans -- What Is It?
A jumbo mortgage loan is simply a mortgage product that is used to finance properties with values over the cut off amount for traditional loans. This cut off value varies from state to state. However, it is generally under $500,000. These loans are particularly popular in states where the real estate market is extremely expensive such as California and New York.
Jumbo Mortgage Loans -- The Basics
Jumbo loans are not simply large traditional loans. They are a specialty mortgage that is designed especially for high value homes. Generally, they come with high interest rates and longer terms. For example, a couple may qualify for a 30 year fixed interest rate traditional loan with an APR of six percent for homes valued under $500,000 or a jumbo 50 year mortgage with a fixed APR of 7.5 percent for homes valued over $500,000. |
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