| What is a Jumbo Loan or a Jumbo Mortgage? | | | | housing prices. Currently the jumbo loan limit for a one |
| Quite simply it is a loan that does not conform to the | | | | family home is 417,000. For properties in Alaska, Hawaii, |
| guidelines established by Fannie Mae or Freddie Mac | | | | Guam, and the U.S. Virgin Islands, the limits are 50 |
| or exceeds the conventional loan limit is called a | | | | percent higher. |
| Jumbo mortgage loan. In most states, home loans that | | | | Why do you need to know this?? |
| exceed $417,00 to $1,000,000 are considered Jumbo | | | | Once you know your loan is classified as Jumbo or |
| Mortgages. Jumbo Mortgages carry slightly higher | | | | Super Jumbo, you need to ask different questions. |
| interest rates than conventional home loans. This is | | | | From the first conversation you have with your lender, |
| because when any loan is sold to an investor it is | | | | you need to make certain that he or she knows you |
| packaged in bundles of several million dollars. For | | | | need a jumbo or super jumbo loan. You need to be |
| example an investor might purchase a loan bundle that | | | | prepared for having at least two appraisals on the |
| is valued at 3 million dollars. In that bundle, lets say that | | | | property, and potentially providing more documentation |
| there are 12 mortgages for $250,000.00 each. If one of | | | | than other loan programs. You need to make certain |
| those loans defaults, the default ratio would be 1 out of | | | | that your lender has the proper resources to offer you |
| 12. When a jumbo loan bundle is sold, that 3 million | | | | competitive jumbo and super jumbo financing. |
| dollar bundle may only contain 4-5 loans. In this case if | | | | Super Jumbo Mortgage |
| one of those loans defaults the ratio increase to 1 out | | | | A loan amount over $1 Million is classified as a "super |
| of 4. Hence the risk is greater for the investor. The | | | | jumbo" loan. Most lenders do not offer residential |
| greater the risk, the higher the rate. | | | | mortgage financing for Super Jumbo loans, and some |
| 2006 Jumbo loan limits | | | | lenders only do Super Jumbo loans. As with a jumbo |
| As with the growth of the housing market, the | | | | loan, documentation requirements, interest rates, and |
| average median price of homes increase steadily | | | | review processes are generally different and more |
| throughout most of the United States. A home that | | | | demanding on super jumbo loans than "conforming" |
| would have been considered conventional just a few | | | | loans, due to the amount of money involved. This type |
| years ago now demands a higher price. Jumbo loans | | | | of loan does usually require excellent credit. |
| adjust their limits regularly to meet the demand of rising | | | | |