Loans that have a higher amount than the conventional loans are known as Jumbo loans. These loans are generally used by borrowers who are seeking to get high loan amount than what has been set by Freddie Mae and Fannie Mac. Jumbo loans come with their own set of advantages and disadvantages and the borrowers need to be really careful before applying for these loans. Typically these loans have a higher rate of interest attached to them and this is a big reason as to why there are only a few takers of these loans.
Also popular as California loans, the Jumbo loans were typically used to buy Jumbo homes and that’s how it got its name. Freddie Mae and Fannie Mac have set the loan limit at $417,000 but the jumbo loans are the ones that come with a higher range. The limit on these loans is much higher than the conventional loans and borrowers of these loans now get a limit that’s past $800,000.
The demand for the jumbo loans increased exponentially during the period when real estate and housing prices surged. There were many takers for these loans even when the rate of interest was higher than the conventional loans. After the real estate industry faced the biggest slump in decades, the interest rates on these loans have plummeted. Presently it is very hard to qualify for such a loan and the borrowers of such loans have decreased over the last two years.
The basic criteria for qualifying for the jumbo loans are good credit history, high income and greater assets. Lenders consider the borrowers who already own a home as good credit risks. There are several types of jumbo loans just lime the smaller one. These loans range from fixed rates to adjustable loans. This is the reason why the interest rates on jumbo loans vary widely and is completely dependent on the loan type.
The mortgage interest rates have considerably decreased over the last few years but this does not imply that jumbo loans will be a huge financial burden for the borrowers. Mortgage interest rate calculators will be able to provide a clearer picture on the financial commitments that the borrower has to make.
The details about jumbo loans are a bit sketchy and not many financial advisors are sure about the same, so it is imperative that the borrower carries out his part of research before signing on the dotter lines. There are numerous online resources from where accurate information on Jumbo loans can be acquired.