What the Heck is a Jumbo Mortgage Loan?
Windowofworld.com – You’ve probably heard the term jumbo mortgage loan and wondered what it means. Well, in this short article I will explain to you the meaning and why it is important for you to understand it.
Basically, if the mortgage loan exceeds a certain amount, it is considered a jumbo mortgage loan. Currently (as of 2006), jumbo mortgage loans are loans of over $ 417,000. The limit usually changes every year. In 2005, the amount was $ 357,650.
The best part about a jumbo mortgage loan is that the approval process is the same for conventional loans for most lenders. Unfortunately, interest rates on jumbo mortgage loans are usually 1/4% higher than conventional loans but this varies and the difference seems to diminish from year to year.
Since brokers are usually compensated based on the loan amount and the jumbo mortgage loan is a larger amount than conventional ones, you should feel comfortable negotiating loan rates with your broker or lender. I was amazed that people would negotiate a $ 100 tire purchase but would fail to ask the broker for compensation on a $ 1 million loan. A good mortgage broker is happy to discuss costs and in most cases appreciate them. This way there are no surprises or worries after escrow has closed.
Whenever you start the loan process whether to refinance or buy a home, I recommend the following steps:
1) Review current mortgage rates on the internet and get a feel for the current market. Interest rates change frequently so this step only gives you an idea. When looking at over rates make sure you review the jumbo mortgage loan rates as there are different rates.
2) Assess your loan needs and the amount you think you need
3) Ask family or friends for references from mortgage brokers
4) If you can’t find a referral, you should proceed with caution and develop a list of questions for your prospective mortgage broker.
5) Questions you should ask include: how long have you been on the mortgage loan, are you a full-time mortgage broker, how do you rate your jumbo mortgage loan, and what education you have. Asking this question will give you a good first impression of a mortgage broker.
6) Determine whether you need to prequalify for a loan
7) Complete loan applications thoroughly and accurately
If you work with an experienced mortgage broker, the process will be very easy as the mortgage broker will anticipate problems and handle them proactively.
If you follow the steps in this article, you are on your way to getting a large jumbo mortgage loan and will build a long-term trusting relationship with a mortgage broker.