We all have property dreams. We aspire to own the perfect family home. We envision a dwelling or house that matches our every want and wish. Then something happens. We encounter financial problems. The mortgage application process becomes difficult as reality hits us hard.
Unforeseen circumstances can dash our dreams when they’re almost reached.
Fortunately, there’s help. If you’re seeking the property you’ve always wanted, don’t let the process daunt you. A mortgage broker can help you pursue a home that meets your needs, with a mortgage you can afford.
In some cases, you might have to go above and beyond the normal mortgage loans offered. For homes that are particularly expensive, certain conforming loans simply don’t work. If you need to borrow more than the typical maximum amount, you may need a jumbo loan.
Consult with your Philadelphia broker about a jumbo loan right for you. Your loan broker may be able to find a lender who will provide jumbo loans at highly competitive rates.
What Exactly Is a Jumbo Loan?
As the name suggests, a jumbo loan is a large loan that exceeds normal conforming loan limits. In most counties in the country, you cannot exceed roughly $500,000 for a loan. This loan cap is determined and set by the Federal Housing Finance Agency (FHFA).
Jumbo loans, or non-conforming conventional mortgages, are a workaround to get more money. They have different underwriting standards and terms than many ‘traditional’ loans. If you are considering purchasing an expensive home, your best option may be a jumbo loan.
However, finding the right lender can be very difficult. It is important that you understand the variables relevant to jumbo loan mortgages.
Important Details of Jumbo Loans
It should be no surprise that a larger loan may come with stricter criteria. After all, the lender is taking a risk. He or she wants to absolutely ensure that you can pay back the substantial borrowed amount. Lenders will address this increased risk in a number of ways.
Before you consult your area mortgage broker, ensure that a jumbo loan is necessary. In many U.S. counties, the 2020 conforming loan limit has been raised to $510,400 from $484,350 in 2019.
Specific to the Philadelphia area, conventional loan limits in the county are $510,400 for 1 living-unit homes. Four living-units may receive up to $981,700 in loans.
The main aspects of a jumbo loan typically include:
- Increased risk to lenders
- Not guaranteed by Fannie and Freddie
- Available at both fixed and adjustable interest rates
- Larger required down payments
- Larger closing costs and fees
If you are considering a jumbo loan, you should immediately contact a Jumbo Loans company in Philadelphia. These loan brokerage experts can review your financial and personal information to determine if a jumbo loan is suitable for you.
Oftentimes, your broker may even be able to find a lender who offers the jumbo loan at competitive rates.
Finding Jumbo Loans with Competitive Rates
Although lenders typically have stricter terms due to the risk of the jumbo loan, some lenders may be more lenient. The market and your personal financial situation can make a big difference. Moreover, certain areas of the country allow you to take on even larger loan amounts.
In affluent areas on the West coast and in the Northeast, conforming loan limits reach as high as $765,600.
Lenders are always more likely to reduce rates if your financial health is good. You should ensure that your credit trustworthiness is high and your cash reserves strong, Your broker may have you provide additional documentation to show the strength of your finances.
Jumbo Loan Qualification
You should consider several important factors when applying. These variables may play a critical role in getting you reduced interest rates and fees. It is important that you do everything to improve your credit score, your cash reserves and your debt.
Credit Strength
Your credit score can tell a lot about you as a trustworthy borrower and reliable payer. Many lenders want jumbo loans borrowers to have very strong credit scores. Your FICO score should be at least 700, if not 720, just to qualify. The higher, the better.
Debt-to-Income (DTI) Ratio
This ratio represents the percentage of your income that is going toward your debts. More specifically, it is the percentage of your monthly income spent on these debts. Debts include your mortgage, credit card bills, student loans, auto loans and more.
You should do your best to minimize your DTI whenever possible. Make sure you pay off your credit card debts especially. Many lenders will not allow you to exceed a DTI of 45%.
In exceptional circumstances, you may be able to have a high DTI if your other financial indicators are strong.
Credit Strength
Your credit score can tell a lot about you as a trustworthy borrower and reliable payer. Many lenders want jumbo loans borrowers to have very strong credit scores. Your FICO score should be at least 700, if not 720, just to qualify. The higher, the better.
If you are seeking optimal rates and terms for your jumbo learn, consult a mortgage broker. In many cases, your broker can help you gather other financial documents as well. You will likely need your full tax returns, W-2s, and other account and investment statements.
Consult the experts of Latitude Financial about the jumbo loan application process, today.
