One type of alternative mortgage that many Americans are exploring is known as the jumbo mortgage. Typically jumbo mortgages have higher interest rates since the loan amount is above conventional conforming limits and needs financing by companies which are not directly government backed. Often, borrowers with turn to jumbo mortgages when they are unable to secure other types of mortgages due to bad credit or other financial restrictions.
Borrowers who do not qualify for adjustable rate mortgages or fixed rate mortgages and wish for a higher limit than that of FHA loans often choose jumbo mortgages as an alternative. Jumbo mortgages provide loan amounts that are much higher than the limits typically given for adjustable rate mortgages and fixed rate mortgages. Jumbo loan limits exceed the standard limits set by government-sponsored Fannie Mae and Freddie Mac. Any loan that exceeds the amounts set by Fannie Mae and Freddie Mac fall under the umbrella of jumbo mortgages. To offset the costs incurred by setting higher loan limits, jumbo mortgage lenders typically charge higher interest rates, and are more likely to foreclose on homes.
Advantages of Jumbo Mortgages
Jumbo mortgages have a relatively negative reputation in the United States. However, despite general impressions of Americans, there are several distinct advantages to obtaining a jumbo mortgage. The most obvious advantage is that the loan limit is set much higher than the limits of more traditional mortgages. This allows borrowers to mortgage more expensive houses that might not be affordable under a lower loan limit. As a result, jumbo mortgages substancially increase the number of options a potential homeowner can choose from.
Another advantage of jumbo loans is having to only deal with one lending institution. Other types of loans often operate through multiple institutions, such as the FHA and other government bureacracies, as well as private lending institutions. In a misguided effort at avoiding jumbo mortgages, many homeowners take out multiple mortgages from separate lending institutions. This makes refinancing difficult, and often renders it impossible. Working with a single lending institution allows for easy modifying of loans.
As the economy has recovered from the housing crash, the rate spread between jumbo mortgages and conventional home loans has drastically shrunk below historical norms. At some points jumbo loans have even been cheaper than conforming mortgages.
Refinancing Your Jumbo Mortgage
A refinance jumbo loan can be valuable to homeowners. There can be a number of benefits associated with a refinance jumbo loan, such as lowering monthly payments, switching from an ARM to a fixed-rate, home equity financing or even loan consolidation.
Lower Rate and Lower Payment
A jumbo refinance can help lower your current interest rate, resulting in a lower monthly payment and potential savings over the life of your loan.
Home Equity Financing
Take advantage of your home equity with a jumbo refinance! Our home equity financing option allows you to take out a new jumbo loan with a larger loan amount than your current one and have the difference paid to you. Use this extra money for home improvements, investments, or debt consolidation.
Many homeowners today have a second mortgage. With a refinance jumbo loan, you can combine your first and second mortgages into one jumbo loan. This allows you to consolidate your debt and reduce your payments with a lower interest rate.
Refinance into a Fixed-Rate Jumbo Loan
If your loan is nearing its adjustment period, or if you are already paying a higher interest on your mortgage, a jumbo refinance could help you save. With today’s competitive jumbo-loan interest rates, you may be eligible to refinance into a fixed-rate mortgage and enjoy the security of a fixed interest rate and monthly payment.
To learn more about refinance jumbo loans, and how we may be able to help you secure a competitive jumbo refinance loan, call us at 888-496-8704. One of our experienced mortgage lending specialists will be happy to answer any questions you may have so that you can make the best decision that fits your unique financial situation.