Are you looking to buy a beautiful home in Dallas, Texas or California? Are you afraid you won’t be able to secure the financing that you need? A jumbo loan may be just the solution for you. This type of mortgage product can be used to finance home loans that exceed restrictions set by Government-Sponsored Entities (GSEs) like Fannie Mae and Freddie Mac. Stonebriar Mortgage is here to discuss jumbo loans for Dallas, Texas and California dream homes. Read on below for more information.
Jumbo Loan Essentials
There are two types of loans: conforming and non-conforming. If a loan is non-conforming that means it exceeds limits set by the GSEs. The limits for conforming loans are updated annually to reflect current home prices, and may be adjusted for more expensive areas, like in California. A non-conforming loan will not get approved for government backing.
In addition, a higher down payment may be required to secure this larger mortgage. You may even be able to provide enough money down to bring the loan into conforming standards for other government programs, such as FHA or VA loans. It is good to explore your options and apply, then adjust down payments and apply again if rejected.
Applying for a Jumbo Loan
When you go to apply for a jumbo loan, there will be a deep review of your finances. The lender will want to verify if you are able to repay the large loan amount using several factors. Here are some of the items considered:
- Your credit score: usually you will need a good one to get approved.
- Current debt owed and your debt-to-income ratio.
- Whether the loan is within conforming or non-conforming rates.
- Whether you can get Private Mortgage Insurance (PMI).
- Whether you can offer a down payment (usually they want to see 10-20%).
- Your current cash reserves and assets.
- Your home ownership or rental history.
Jumbo Loan Packages
When you secure a jumbo loan, you will need to obtain Private Mortgage Insurance (PMI). PMI protects the lender in case you default on your payments. The cost of this insurance will be factored into your monthly payments. Once you pay down more of the loan, you can negotiate to have the PMI requirement dropped.
Interest rates for a jumbo loan may be higher, due to their increased risk. Perhaps you can investigate an adjustable-rate mortgage, then, apply to refinance the loan down the line if you do not like the rates that you are given. There will be closing costs associated with securing the original loan and with refinancing the loan again.
Whether or not you decide to get a jumbo loan, Stonebriar Mortgage is here to help Texas and California residents secure their dream home. Contact our friendly team today with any questions.