Jumbo Mortgage Loans
If you want to purchase a home, you will more than likely have to take out a mortgage loan to cover the cost of the house. Every mortgage has basic terms and guidelines. However, if you want to purchase a home that is considered a high priced home, there are different rules that apply to the mortgage. This type of mortgage is called a jumbo mortgage.
Expensive homes are typically harder to sell. For one, there are fewer buyers that fall into the category of qualifying for a high priced home purchase. Secondly, the people that do fall into that category sometimes have specific ideas about what they want their home to be like.
The more extravagant homes don't always appeal to a mass amount of people. For this reason, it takes more time to sell the homes. If during the time it takes to sell, the borrower defaults on the loan, than the bank has now assumed the responsibility for the house. Banks don't like to have foreclosed homes on their hands.
Jumbo mortgage loans are offered only when the borrower can put down a large down payment on the home. Twenty percent of the cost of the home is usually considered a good down payment for a regular mortgage. But twenty percent usually isn't even enough when purchasing a high priced home.
High interest rates are typically involved in the terms of the loans as well. The larger the loan amount, the more interest you will be paying each month. So higher interest rates really increase your monthly mortgage because not only is the interest rate high, but the amount you are paying interest on is extremely large as well.
Closing costs on the loans are very high as well. Overall, this type of mortgage is really expensive. In the past, these types of mortgages were only needed for high-end luxury homes, but in recent years, housing prices have skyrocketed. Many people in areas like California and Washington D.C. were forced to become jumbo borrowers even though they were buying a modest home.
In February of 2008, as part of a stimulus package, President Bush signed off on temporarily increasing the jumbo mortgage limit to 729,750 dollars. This was an increase of 125 percent more than what the typically jumbo limit had been.
Even though banks can potentially make a lot of money on jumbo mortgages, they are still choosy about who they lend to. If you plan to buy an expensive home in the future, make sure you have a good credit score and plan to put down a large down payment. This will improve your chances of qualifying for a loan to purchase the home you want.
Expensive homes are typically harder to sell. For one, there are fewer buyers that fall into the category of qualifying for a high priced home purchase. Secondly, the people that do fall into that category sometimes have specific ideas about what they want their home to be like.
The more extravagant homes don't always appeal to a mass amount of people. For this reason, it takes more time to sell the homes. If during the time it takes to sell, the borrower defaults on the loan, than the bank has now assumed the responsibility for the house. Banks don't like to have foreclosed homes on their hands.
Jumbo mortgage loans are offered only when the borrower can put down a large down payment on the home. Twenty percent of the cost of the home is usually considered a good down payment for a regular mortgage. But twenty percent usually isn't even enough when purchasing a high priced home.
High interest rates are typically involved in the terms of the loans as well. The larger the loan amount, the more interest you will be paying each month. So higher interest rates really increase your monthly mortgage because not only is the interest rate high, but the amount you are paying interest on is extremely large as well.
Closing costs on the loans are very high as well. Overall, this type of mortgage is really expensive. In the past, these types of mortgages were only needed for high-end luxury homes, but in recent years, housing prices have skyrocketed. Many people in areas like California and Washington D.C. were forced to become jumbo borrowers even though they were buying a modest home.
In February of 2008, as part of a stimulus package, President Bush signed off on temporarily increasing the jumbo mortgage limit to 729,750 dollars. This was an increase of 125 percent more than what the typically jumbo limit had been.
Even though banks can potentially make a lot of money on jumbo mortgages, they are still choosy about who they lend to. If you plan to buy an expensive home in the future, make sure you have a good credit score and plan to put down a large down payment. This will improve your chances of qualifying for a loan to purchase the home you want.
About the Author:
Sarah's worked has helped hundreds of people to learn about mortgages for people with bad credit and about other types of interesting and creative home loans with bad credit.
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3:57 PM
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