What is a Jumbo Loan?
A Jumbo Loan, also called a non-conforming loan, is a home mortgage loan that allows financing for loan amounts that exceeds the maximum $424,000. Since home prices for larger or luxury homes can often exceed this amount, this loan might be perfect for the house of your dreams.
A Jumbo Loan is your best (or only) option if you need to borrow between $424,000 and $3,000,000 for a home purchase or refinance, and are looking for higher but flexible rates and terms, and no pre-payment penalties.
With the fluctuating market, Jumbo home mortgage loans do call for stricter requirements than in years past, but still follow a similar process that a typical loan would. You will generally need a 20% down payment and will be able to potentially receive lower fixed or adjustable rates offering flexibility for financing with a bigger loan.
When choosing a Jumbo Loan…
You must consider that you are looking at higher interest rates but also recognize that it also provides the convenience of one loan for the entire amount you are looking to borrow instead of several loans. Plus, you can add extra features such as interest-only payments or temporary buy-downs.