Your Questions Answered - Jumbo Loans
It's Sunmark's "Welcome Home Week". Are you looking for a new home? We're ready to help you make it happen. Recently, Sunmark added more mortgage products to our line-up to help you do more with your money. All week, our Sunmark experts will provide the answers to your top questions about these new offerings.
Jumbo Loans: A Q&A with Sunmark’s AVP of Mortgage Originations,
What is a Jumbo Loan?
A Jumbo Loan, sometimes referred to as a “jumbo mortgage,” is simply a mortgage product for an amount that exceeds the “conforming loan limit.” The “conforming loan limit” refers to the dollar cap on the size of a mortgage eligible for purchase by Fannie Mae and Freddie Mac, the government-sponsored enterprises (GSEs) that ultimately buy and administer most single-family-home mortgages in the United States. In most areas of New York State’s Capital District, the conforming loan limit is $548,250, while in Westchester County, the conforming loan limit is $822,375.
Who is the ideal candidate for a Jumbo Loan?
A Jumbo Loan is the right choice for a homebuyer looking to purchase either a luxury home, or any home with amenities that results in a purchase price that’s significantly higher than the average home in the county or surrounding community. This type of loan would also be relevant to a homeowner who is refinancing for a larger amount.
What requirements need to be met to qualify for a Jumbo Loan?
To be eligible for a Jumbo Loan, a homebuyer must have a FICO score of at least 720, along with a 20 percent down payment or a 70 percent loan-to-value on a refinance cash out. Jumbo Loans are for single-family homes only; they cannot be used for investment properties.
If I didn’t meet the qualifications what other options are available?
For homebuyers who do not meet the qualifications for a Jumbo Loan, you can put a larger payment down – which would bring the loan amount into conforming limits. If you are refinancing, your other option is to refinance at the conforming limit and take out a home equity loan for cash out.
What are the Pros and Cons of a Jumbo Loan?
Homebuyers utilizing a Jumbo Loan benefit from having a single loan with a single payment, as opposed to taking a first and second mortgage with two payments. Jumbo Loans are also attractive to many homebuyers because the loan size allows you to get “more house.”
When exploring a Jumbo Loan product option, it’s important to keep in mind that there may be higher closing costs. Additionally, more of your money will be tied up in a larger down payment.
How does the Jumbo Loan work and what happens once approved?
A Jumbo Loan functions like a standard conforming loan. After the title and appraisal have been submitted and the loan is approved, a closing is scheduled, and the loan receives final completion after all paperwork is finalized.
What sets the Jumbo Loan product apart from other options?
With a Jumbo Loan, homebuyers have more options when house hunting.
Tom Phillips is the AVP of Mortgage Originations at Sunmark Credit Union. He has over 20 years of experience in the financial industry.