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While in the midst of an extremely uncertain economic climate, people across the country are still buying new houses, especially in Utah where our market is still very strong. The housing market is seeing historically low-interest rates and a lot of homebuyers are taking advantage of the unforeseen benefit. However, the liquidity crunch from the market also has had a few negative impacts including causing some of the banks and brokers to pull back on some of the programs they typically offer for homebuyers. It has resulted in frustration for not only buyers but sellers too. A way to help supplement these setbacks is looking into getting a jumbo loan.
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A jumbo loan is what someone might typically use to buy a luxury home, but it is also something to consider during this time in particular. By definition, a jumbo loan (or a jumbo mortgage) is any loan over $510,400 nationwide. There are some counties that might have exceptions to this though.
A jumbo loan is a loan for any amount that exceeds the ‘conforming loan limit’. Because of that, jumbo loans are not covered under the Federal Housing Finance Agency (Freddie Mac or Fannie Mae). Jumbo loans have exceptionally good interest rates right now, and they are available at many local community banks who make it as easy as possible to obtain.
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Before pursuing a jumbo loan, it’s important to keep in mind that there are generally higher qualification requirements for jumbo loans than traditional, or conforming, mortgage loans such as a higher credit score and income, additional assets, additional appraisals, and larger down payment. Further, these loans generally have higher interest rates and closing costs than traditional or conforming mortgage loans.
If you are looking to buy a new luxury home, a jumbo mortgage might be right for you. Be sure to do your research and talk with your local community bank to see if a jumbo loan is right for you.