Adjectives are a double-edged sword for any writer. On one hand they can be overstated and ridiculous like calling snack food “x-treme” or calling a movie “an edge-of-your-seat thrill ride,” but if used with a restrained hand they can be a useful tool. A chilled glass of lemonade sounds more appealing than a regular one and a juicy steak is superior to a non-descriptive slab of meat. With every adjective, you have to search for the reason why it’s there: is the steak juicy because it was cooked to perfection or because it’s raw and bloody? Every adjective needs clarification, which is why this week’s Know Your Mortgage will focus on a loan with a hefty adjective in front of it: Jumbo Loans.

What Is a Jumbo Loan?

A jumbo loan is a loan that is over the conforming loan limit set by government-sponsored mortgage groups, which are Freddie Mac and Fannie Mae.

What’s a Conforming Loan Limit?

I figured that would be the next question. Freddie Mac and Fannie Mae are allowed to set the cap of how high any individual mortgage can be. In 2010, it was decided the conforming loan limit at which they would buy mortgages up to would be $417,000; if you live in Alaska, Guam, Hawaii or the U.S. Virgin Islands the limit is $625,000. If your mortgage amount is higher than either of these amounts, then it becomes a jumbo loan.

What Do I Need to Know About Jumbo Loans?

As said before, jumbo loans do not meet the requirements set by Freddie Mac and Fannie Mae, so higher payments can be expected because of the risk involved. A larger down payment, for example, might be required because more of a risk is taken by the lender with jumbo loans. If a house with a jumbo loan goes under and there haven’t been significant payments on it, the lender is hung out to dry in order to cover the costs lost.

In a nutshell, everything is jumbo about the jumbo loan: the size of the loan, the down payment and the monthly payments. This may sound alarming, but it’s normal in comparison to the size of an average loan. If you’re truly looking for that dream house and it falls into that range, don’t let the adjective “jumbo” deter you. All loan types are available in jumbo form: fixed, adjustable, VA, even FHA.

See? Adjectives aren’t that intimidating if you find the implied meaning behind them, and don’t let the “jumbo” of jumbo loan frighten you from getting one. If you have any lingering questions about the topic, please fire away below.

 

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This Post Has 6 Comments

  1. Can you explain FHA Jumbo loans? I was under the impression that FHA loans couldn’t be done for more than $270,000 in my area. Is this just a regional product?

    1. Hi Amanda:

      Certainly. FHA loan limits can be a bit confusing because they vary from county to county. The standard loan limits for your county are considered conforming. Anything above that amount is a jumbo loan. You can still get it through FHA, but there may be some additional documentation needed and restrictions. In order to talk about this in depth, the best thing you can do is speak with one of our Home Loan Experts by calling (888) 980-6716. They’ll be able to take you through the ins and outs.

      Thanks,
      Kevin Graham

  2. I owe 296,00 and 75,00 line of credit. want to refinance and cash out 220,000. Have excellent credit. What are the current lates for a fixed 30 year zero points

    1. Hi Nancie:

      It’s not possible for me to give you the rate that would be applicable to you in the comments because there are a variety of factors that go into rates. That being said, we do have a rates page and you may be able to get an idea from that. If you’d like to move forward and get something more specific to you, you can get a full refinance approval online through Rocket Mortgage. If you’d prefer to speak with one of our Home Loan Experts, we’d be happy to take your call at (888) 980-6716.

      Thanks,
      Kevin Graham

    1. Hi Marsha:

      Unless you qualify for a VA loan, there will be some amount of equity required to refinance. How much you need is dependent on your goals with the refinance and whether you’re taking cash out among other factors. I’m going to recommend you talk to one of our Home Loan Experts by filling out this form or calling (888) 728-4702.

      Thanks,
      Kevin Graham

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