Is A Jumbo Loan Right For You?
If you're buying a high-priced property, you may have heard that you'll need a jumbo loan to pay for it. This is because a jumbo loan is for an amount of money much bigger than a conventional loan, and may be the only way to secure the money you need. That's why it helps to know the following information about jumbo loans before moving forward with one.
Jumbo Loan Pros
There are several reasons why a jumbo loan is a great idea. For starters, it may be your only option if you are purchasing that very expensive home when you don't have a big down payment. The cost of the home actually doesn't matter, since the amount of the loan is what would prevent the loan from being a conventional loan.
A jumbo loan also means that you'll have a single loan that you need to manage. While it is sometimes possible to split the loan into two or more smaller conventional loans, multiple loans may be too much of a hassle for you to do so.
It's also possible for a jumbo loan to require a lower down payment than with multiple conventional loans. That is because a jumbo loan doesn't meet the same standards as a conventional loan, which can require things like 20% of the down payment to avoid paying private mortgage insurance
Jumbo Loan Cons
Know that a jumbo loan will typically have a higher interest rate than a conventional loan. This is due to the jumbo loan being more of a risk to the lender since the loan can never be sold back to the government. A higher interest rate is charged as a result, since a lender will receive a large chunk of interest payment toward the beginning of the loan.
A lender may also have strict guidelines when it comes to your credit history. Once again, the risk is being put on the lender with a jumbo loan, so they'll need to consider all aspects of your financial health before approving one.
It's important to be aware that jumbo loans are not common, and it may be difficult to find a lender that offers one. This can lead to a lot of unnecessary searching when you know conventional loans are so common.
Are you still thinking about getting a jumbo mortgage loan? Reach out to a local lender to learn more about jumbo loans.
