What are JUMBO Loans? Alright, this one is kind of self explanatory!
When you’re going for that big house, a normal loan just won’t do. That’s why we have Jumbo Loans. Jumbo loans are mortgage loans that exceed the limits set by the Federal Housing Finance Agency (FHFA). We call these loans “nonconforming loans” because they do not conform to those limits.
A loan is considered to be “jumbo” when it’s higher than the $647,200 limit that conventional “conforming” loans need to be under for 2022 (and likely to be increased to $715,000 in 2023).
Why might I need one?
However, because these Jumbo, nonconforming loans to not have the federal backing like conforming loans do, they require greater scrutiny when it comes to your credit score, debt-to-income ratio, and cash reserves, among other things. Because of the stricter requirements, they often need to be manually underwritten, meaning someone will be scouring your financial history with a fine toothed comb to make sure you can confidently repay this hefty borrow.
Now at one point, jumbo loans were once reserved only for huge houses. However, with housing prices on the rise over the last few years, that isn’t necessarily the case anymore. In fact, depending on the area you’re looking to buy, you may NEED to qualify for one just to purchase a typical house for that neighborhood. $700,000 – $1 million doesn’t get you what it used to! The housing and mortgage industry is changing, QUICKLY!
Is it a good option?
This financing option can be great for homebuyers who are looking to purchase a high-priced home. They offer competitive interest rates and terms, and can be obtained from most major lenders.
Do YOU have any questions about buying a house right now? Still wondering if you can sell your house in this market? Shoot me a message and I’ll do my best to answer all your questions!