Loans are helpful in giving people chances to acquire things that have an extremely high cost. For instance, if you are planning to purchase residential property, it might be helpful to take out a jumbo loan.
What Are Jumbo Loans?
Jumbo loans are a type of asset-based loan that has a high value. This is the biggest difference between jumbo and other types of loans, such as conventional or subprime loans. Back in the 1970s, these loans were given to purchase property with high value on the real estate market. The loan’s value is usually higher than a million dollars.
However, now that the government has increased its mortgage loan limits, jumbo loans are usually for purchasing a property with a value higher than $417,000.
What Are the Loan Limits of Jumbo Loans?
As mentioned, the federal government has increased the mortgage loan limits. Now, you can get higher loan amounts than a million dollars. But there are limits for each state, depending on the laws and ordinances. In general, loan amounts are still dependent on the property’s value, income, and other requirements. For example, you can only take out a jumbo loan if you have a minimum income of $250,000 per year. The loan amounts that you can borrow will also be determined by the property’s value and your income. For example, if you are planning to buy a property worth $1.15 million, you can get a loan of up to $1.15 million.
What Are the Factors to Consider in Qualifying for Jumbo Loans?
While the basic requirements are the same as other types of loans, jumbo mortgage loans have additional factors that you need to consider.
- Credit History. Jumbo loans are usually not given to people who have bad credit. If you want to qualify for this type of loan, you need to have an excellent credit history. If any of your credit scores are below the minimum requirement, you will not be qualified for the loan.
- Documentation. Like other loans, the documentation process for jumbo loans is also quite extensive. Aside from the usual documents, you may also need to secure many different papers. You need to ensure that you have all of the required documents to ensure that you are eligible for the loan.
- Down Payment. This requirement is applicable only to loans with loan amounts of more than a million dollars. If you have a loan amount of $1.5 million, you will only have to provide a down payment of 20%. But if you have a loan amount that is lower than $1.5 million, you will have to provide a down payment of at least 20%.
How Does a Jumbo Loan Work?
Aside from the basic processes, jumbo loans still work the same way as other types of loans. For example, you will still have to go through the process of submitting all of the required documents and information. With a jumbo loan, though, it will take a longer amount of time. This is because, unlike other loans, a jumbo loan is usually written as a second mortgage. If you want to refinance the loan, you will have to wait until the first loan is paid off. This means that even if you have paid off a large part of the loan, you will still have to wait a long time until you can use it.
Your Experts at Mortgages by Misty
A jumbo loan is helpful when you want to purchase property that is a considerably high value. Before taking out a jumbo loan, you have to make sure that you have the right documents and requirements. You need to have a good credit history and a solid income.
Are you looking for jumbo loans in Arizona? You can apply at Mortgages by Misty. Misty Garrison is ready to answer all your questions about jumbo loans and provide you with a variety of financing choices in purchasing your dream home. Contact us today at (480) 618-5358 for a jumbo loan rate quote!