| The Federal National Mortgage Association (FNMA) | | | | jumbo loans due to inconsistent underwriting |
| and the Federal Home Loan Mortgage Corporation | | | | requirements and increased lender risk. Larger down |
| (FHLMC), commonly known as Fannie Mae and | | | | payments may also be required for jumbo loans. Also, |
| Freddie Mac, respectively, subsidize the real estate | | | | PMI is temporary. Once your house builds the |
| mortgage market by buying mortgage loans originated | | | | necessary equity, you can request that the lender stop |
| by banks and other lenders. However, these | | | | charging you for PMI (if it doesn't automatically drop |
| government sponsored entities (GSEs) are subject to | | | | off). In some areas, it may take less time than you |
| maximum loan amounts (e.g., $417, 000 for a | | | | think due to fast appreciation. |
| single-family home). Loans up to these limits are | | | | You can avoid a jumbo loan by taking out a piggyback |
| considered conforming loans. "Any loan over that | | | | loan (1st and "piggyback" 2nd mortgage). Similar to |
| amount is considered either a jumbo or a super-jumbo | | | | jumbo loans, there's no PMI with the piggyback 2nd |
| loan," explains Steve Litten, president of Home Security | | | | mortgage. The advantages of two loans are that your |
| Mortgage in Fredericksburg, Virginia. However, | | | | interest rates and points could be lower than for a |
| conventional loans can be either conforming or | | | | jumbo loan, depending on your FICO score and other |
| non-conforming loans (jumbo and super jumbo loans). | | | | factors. Qualification is a little easier, too. Also, because |
| Jumbo loans run between $417,001 and $650,000. | | | | the loans generally are through the same lender and |
| Loans above $650,000 are super jumbo loans. | | | | close at the same time, closing costs on the 2nd are |
| Jumbo loans offer attractive features, including fast | | | | usually very low. Piggyback loans are also good for |
| closings, no points, no private mortgage insurance (PMI), | | | | those needing 100% financing, an option that's generally |
| no lender fees, and even interest-only new home loan | | | | harder to get with jumbo loans. The disadvantages are |
| mortgages. The primary disadvantage of jumbo loans | | | | that you now have two mortgages to pay and it may |
| is that they carry higher interest rates and points than | | | | be harder to refinance or get home equity loans later |
| conforming loans. It's generally harder to qualify for | | | | on. |