Article by Mortgage Guru
When we speak of purchasing a new home, you would generally require help from lenders to finance your home. Not too many of us might have the sufficient liquid funds to finance a deal as large as the purchase of a home, thus we would usually require to apply for a mortgage loan. If the loan amount that you require exceeds $ 417,001, then it may be advisable to opt for a 30 year fixed jumbo mortgage loan package to finance your purchase. A 30 year fixed jumbo mortgage loan would offer you the required finance for the purchase of a home from $ 417,001 all the way up to a few million dollars. If you are purchasing a home that is below that threshold, you could opt for the conventional home mortgage loan, yet if the value of your mortgage loan that you require exceeds the $ 417,001 mark, a jumbo mortgage loan is the way to go!
Usually when the loan amount that you apply for exceeds $ 650,000, your application would then fall into the “super jumbo” category. For the record, these jumbo loans are also popularly referred to as “California Loans” as many people utilize these jumbo mortgage loans to purchase highly-priced mortgages and homes in the city of California.
With this 30 year fixed jumbo loan, your principal would be repaid over the time period with a predetermined 30 year mortgage rate. The interest rate that you would be paying would remain unchanged for the duration of the loan, and you would not be affected by any economical changes such as what would be experienced if you undertake an adjustable rate mortgage (ARM) loan.
The main advantages of these fixed jumbo loans are the sheer size of the loans, as well as the stability that come attached with these finance packages. You could avoid the jumbo scenario by opting to pay a large down payment to ensure that your loan amount is smaller. Nevertheless when we speak of homes that exceed $ 500,000, it is generally difficult to come up with the required liquid funds to avoid the jumbo situation.
A jumbo loan would help you finance an expensive home by offering you the required amount of cash to purchase the home. Opting for the fixed interest rate loan would also prove to be more stable than ARM mortgage loans that hold market-dependent interest rates. With the fixed jumbo rate option, the amount that you pay on a monthly basis to your lender would not change over the 30 year duration, something that allows you to plan your finances accordingly for the long term.
On the negative side, the 30 year rate of these fixed jumbo loans would generally be higher than the usual 30 year fixed mortgage loans as the amount in question is considerably larger. Thus there are more risks involved when lenders award you a bigger sum of money, resulting in a higher interest rate charged on these jumbo variants. Usually if an individual does not service a conventional mortgage loan, the lenders would seize the home and proceed to complete a short-sale to recoup any losses.
This scenario is generally more difficult to accomplish when the price of the home in question is inflated, as it would be more tricky to find a buyer for a highly-priced home. Thus the risk of approving a jumbo mortgage loan is definitely higher compared to conventional home loans. At the moment, the average interest rate that is charged for 30 year fixed jumbo mortgage loans is approximately 5.44%, while conventional 30 year fixed mortgage loans generally come with interest charges of 4.49%.
Remember that before your jumbo loan is approved, the lender would usually analyze and evaluate your financial background, your monthly income, your credit report and score, as well as your ability to repay the jumbo loan over a period of 30 years. Barring any complications, your application should be approved if you qualify in the books of the lender. All the best in obtaining the right fixed rate jumbo loan for the purchase of your home!
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