Tips on Getting a Jumbo Loan
By: BankingMyWay.com Staff
By Brian O’Connell
With credit tight and lenders skittish about adding more risk to their balance sheets, it’s not easy getting a jumbo mortgage loan these days. But it’s not impossible, either. You just have to know how to press the right buttons.
First, before you begin to weigh your mortgage options. know that there is little incentive for lenders to make jumbo loans. Most of Washington’s focus on revitalizing the housing market is targeted at conventional loans. Jumbo loans, or those larger mortgage loans of over $417,000 are also usually pricier, with interest rates often a full percentage point higher than conventional loans .
But despite these obstacles, getting a jumbo loan, even in a tight market, is still doable.
Some things to consider:
• Get as much as cash on the table as you can. Your chances of getting a jumbo loan are significantly enhanced if you can put more than 20% down in cash. The jumbo market is all about risk right now. Consequently, anything you can do to reduce the lender’s risk exposure is a bonus. To figure out how much a higher down payment can help, use the mortgage loan calculator at BankingMyway.com.
• Use a mortgage broker. A broker can help you expand the playing field by finding the best possible deals to find a jumbo loan. If you go it alone, you run
the risk of reducing your loan options, and possibly cutting yourself from the best deals.
• Factor in higher interest rates. One sticking point with jumbo loans is that they can’t be sold in the secondary markets to larger lenders like Fannie Mae or Freddie Mac. With secondary markets closed off, interest rates tend to be higher than with conventional loans. As a result, it’s a good idea to use a mortgage lender to get as many loan options, and potentially better rates as possible. To find the best interest rate deals, shop around for offers from local lenders by entering your ZIP code at BankingMyWay.com .
• Scrutinize your mortgage application. With competition heavy for jumbo loans, make sure your loan application is squeaky clean. That means filling in all blank fields and ensuring that your information is accurate. Check for spelling, too. Many mortgage lending databases kick back applications that have errors like misspelled words.
• Get a good grip on closing costs. Lenders may cross you up by offering lower interest rates. but make it up on the backend with higher closing costs and fees. Match up closing costs from competing lenders just as arduously as you would in comparing interest rates.
That said, there are some early signs that the housing market might might be ready to spring forward. That goes for the jumbo market, too -- but only if you plant the right seeds.
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