You may have heard the term jumbo mortgage. The best way to describe a jumbo home loan is that it is a home that exceeds a value of $417,000. In some areas of the country, especially in areas like California, New York and sometimes the city limits of Chicago, a loan is only considered a jumbo loan when it exceeds $625,000. However, regardless of whether you’re home purchase is in a market where home prices are higher and a standard home for you would cost over $417,000 or you’re looking to purchase a slightly larger home in real estate markets that have more inflated prices, there’s a few things to consider when you’re thinking about jumbo home loan purchases in NJ.
As you might expect, securing a jumbo loan is going to mean that you are going to have to measure up to some rather strict requirements by the lending institution that you’re looking to for securing a jumbo loan. With the bubble bursting in the housing market, banks aren’t quite so willing to loan out a large amount of money to just anyone. That’s why they have established very strict requirements for income, debt ratio and credit scores as well as higher levels of down payments in order to qualify for jumbo loans.
In addition to stiffer requirements when it comes to securing a jumbo loan, as was the case even before the housing bubble, a jumbo loan is still going to come at a higher interest rate than what you would get with a standard mortgage. It’s very difficult if not impossible to receive a prime rate on a jumbo mortgage. You may be able to attain this by refinancing your jumbo mortgage at a later date but typical jumbo loans won’t come anywhere close to prime interest rates for mortgages.
Whether you’re forced to get a jumbo loan because the inflated prices of homes in your area require a loan over $417,000 or whether you’re looking to purchase a larger more accommodating home, it’s best to be aware of the requirements necessary to get a jumbo loan. This way, if you don’t measure up to the requirements you can work towards reaching them. Secondly, you won’t be surprised when you go looking for a jumbo mortgage and find a myriad of different requirements for these loans than you would with traditional loans.
