What to Expect From a Jumbo Mortgage Loan.

A jumbo mortgage loan isn't significantly different than more traditional mortgage loans, but there are a few things to be aware of.

What Is A Jumbo Mortgage Loan?

A jumbo mortgage loan is one taken for a top-dollar property. Both in Colorado and most of the United States, a jumbo mortgage loan is any mortgage that exceeds $417,000 - the limit set by Fannie Mae and Freddie Mac for conforming loans.

Fannie Mae and Freddie Mac, the two agencies that buy the majority of real estate mortgages, will not buy a loan for an amount greater than $417,000 in most parts of the country (Hawaii, Alaska, and a few other territories. Therefore, the large jumbo mortgage loans are sold to other investments, often banks and insurance companies, and so a jumbo mortgage loan falls into a different category. Rates for a jumbo mortgage are also higher than conforming loans because there is more risk involved.

What This Means for Jumbo Mortgage Interest

The size of a jumbo mortgage loan means there is more to lose. Both the size, together with other factors, result in a higher rate over those granted for conforming loans. And since a small percentage of a point on jumbo mortgage rates translates into a sizable payment difference, buyers should shop around for a good lender when applying for a jumbo mortgage loan in order to find the best rate. buyers should shop around for a good lender when applying for a jumbo mortgage loan in order to find the best rate.

In truth, jumbo mortgage interest rates are only one thing to consider when shopping for a jumbo mortgage. There are closing costs and fees to consider that might even out the difference in rates. Occasionally, the lender with the higher jumbo mortgage rates will actually be the least expensive overall.

It's also important that buyers think about their goals, plans for the future, and other options. Similar to more traditional mortgages, a jumbo mortgage loan is offered as different product sets. Buyers have the option of taking out loans with adjustable jumbo mortgage rates with 3 or 5 year locked rates that adjust after that period, or fifteen or thirty year fixed rates.

Deciding which type of product (variable or fixed jumbo mortgage interest rate) is better for you depends on whether you plan to stay in the home for more than that locked 3-5 year period, or whether you will refinance the loan within 3-5 years anyway.

Buyers should not be scared off from higher jumbo mortgage rates; jumbo mortgage rates are higher only by a quarter of a point or so for well qualified buyers. What’s more, jumbo mortgages are the only option for home buyers in many parts of the country because $417,000 really isn’t that high a price in today’s housing market. As a matter of fact, jumbo mortgage loans are the only type available in many areas. In the end, the best way to find a good jumbo mortgage loan is to shop around and find a reputable lender with good jumbo mortgage interest rates. A good lender will take the time to work with you to understand your goals so they can help you choose the best product.

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