Does the price for your dream home exceed the maximum amount that government-sponsored agencies Fannie Mae and Freddie Mac will buy? If so, you may need a jumbo loan.
In North Carolina a jumbo mortgage loan - or more accurately, a non-conforming mortgage - is one that exceeds $424,100. In areas of the country that have more expensive real estate, where many home buyers would have to use a jumbo loan to purchase, its threshold can go as high as $625,500.
Truliant writes jumbo loans up to $2 million.
A jumbo loan is very similar to a traditional, or conforming, mortgage because it offers similar rates and terms but differs in that it is usually assumed by the financial institution and cannot be traded to government entities following closing.
With jumbo loans, lenders set their own underwriting guidelines. And that means those requirements from minimum credit score to what the institution wants to see in your credit history to how much of a cash reserve you'll need can vary widely.
Find out below if a jumbo loan might be an option for you when financing your next home purchase.
1. Is a Jumbo Loan Right for Me?
Jumbo mortgage amounts can exceed the limit allowed by conventional, conforming loans
(those meeting specific criteria that allow Fannie Mae and Freddie Mac to purchase the loan) and government loans in most parts of the United States.
So, if you are seeking to finance a home whose price exceeds a conventional loan limit, a jumbo loan would be the loan option for you.
2. Do I Make a Higher Down Payment?
For conventional mortgages, Private Mortgage Insurance (PMI) protects the lender if you stop making payments on your loan Since there is no PMI option with a jumbo mortgage, the required down payment will be larger - typically 20 percent.
So, if you have the financial assets that allow you to make a down payment of at least 20 percent, a jumbo loan would be a viable loan option for you to pursue when financing a home.
3. What Qualifying Factors Do I Need to Consider for a Jumbo Loan?
Because of the higher down-payment requirements, PMI is not required on jumbo loans. With a traditional loan, down payments generally range from 3.5% to 20%. Until you have 20% equity in your home you will need to purchase Private Mortgage Insurance (PMI).
At Truliant, you are required to make a down payment of 20% on jumbo loans up to $1 million. For loans between $1 million and $1.5 million, the down payment is 25%, and over $1.5 million it is 30%.
4. Are Interest Rates Higher on a Jumbo loan?
At Truliant, our jumbo mortgage loan rates are comparable to conventional loan rates. And, we offer fixed and adjustable rates.1 Please visit our mortgage web center to learn more about rates for jumbo loans.
5. How does my credit score affect my eligibility for a jumbo loan?
Credit scores are an important consideration with jumbo loans. At Truliant, you’ll need a credit score of at least 700 for jumbo loans below $1 million. Jumbo loans above $1 million require a credit score of at least 720.
6. Do Truliant’s jumbo loans carry additional fees?
With traditional mortgages, Truliant usually doesn’t sell the mortgage to a different financial institution. With jumbo mortgages, that will depend on the amount and the length of the loan.
Jumbo loans also carry three additional fees. There is a 0.25% origination fee, a $695 underwriting fee and a $700 appraisal fee.
To learn more about jumbo mortgage loans, please call 855-293-2957, visit our mortgage loan resource page or visit your local Truliant branch office.
Federally insured by NCUA. Equal Housing Lender. Loans are subject to credit approval. Rates and terms subject to change prior to consummation of the loan. (1) 15-Year Fixed Rate Mortgage with rates starting at 3.91% APR. Mortgage loans available in NC, SC, VA, FL, TN, OH and GA. Loans are subject to credit approval. Rates and terms subject to change prior to consummation of the loan. Rate valid as of 6/20/17. Payment Example: Monthly payment for 15-Year Fixed for $142,000 loan at 3.91% APR is $1,024.