Sometimes homebuyers need to borrow more than the Fannie Mae and Freddie Mac conforming loan limits allow. In those scenarios, a jumbo loan is appropriate. Some homebuyers shy away from jumbo loans, however. Often, this is due to still believing misconceptions about non-conforming mortgages. Let’s go over some common myths and facts about jumbo loans.
- Myth: Jumbo loans are only for returning homebuyers.
- Fact: Jumbo loans are available to both returning and first time homebuyers. First time homebuyers may assume that they are not eligible for a jumbo loan, because they know that qualifying for one can be a rigorous process. But there are no restrictions that limit jumbo loans exclusively to returning homebuyers. If you have a strong borrower profile, you may be able to successfully apply for a jumbo loan to purchase your first home.
- Myth: Interest rates are always high for jumbo loans.
- Fact: This common assumption about jumbo loans is also incorrect. It is typical for jumbo loans to have higher interest rates, but it is not the case every time. The reason why interest rates are usually higher for jumbo loans is because the lender is assuming more risk. The homebuyer is borrowing more money, and the interest rate reflects that fact. If you have a strong profile as a borrower, there is a chance you may qualify for a jumbo loan with a much more competitive interest rate, however. It may even be similar to some interest rates for conforming loans. A high credit score and income with a low debt-to-income (DTI) ratio will help you qualify for competitive rates on a jumbo mortgage.
- Myth: You need to make a minimum down payment of 30%.
- Fact: Down payments for jumbo mortgages tend to be higher than they are for conforming loans, all things being equal. That means that you may sometimes see a 30% minimum down payment. But this is not true all of the time. There are sometimes opportunities to buy a home with a lower down payment using a jumbo loan. Again, it comes down to qualifications, as well as the underwriting guidelines for the lender you are using. If you need tips for how to raise your credit score or lower your DTI ratio, you can ask during your consultation. Tell us your scenario, and we will be able to make recommendations.
- Myth: Jumbo loans are only for mansions.
- Fact: When people hear the term “jumbo loan,” they sometimes picture an extravagant mansion. This is not the only situation where you might need a jumbo loan, however. The average home value in Oakhurst is below the conforming loan limits. But there are still some homes in the area that exceed those limits even without being ostentatious. Perhaps you want to move to a home that features a beautiful view, for example, driving up the price. You might also be shopping for a home elsewhere in California. Even though conforming loan limits are higher in some more expensive counties, there are still numerous properties throughout CA that might require larger than conforming home loans. Whatever the case may be, to get your dream home or to move into a home in the perfect neighborhood, it can be worth it to take out a jumbo mortgage.
Apply for a Jumbo Loan in Oakhurst or Beyond
Granite West Funding can help you buy a home with a jumbo mortgage, or explore other suitable loan options. To get answers to your questions about jumbo loans or to apply today, please give us a call at (559) 540-2275. We are based in Oakhurst, and can help you buy a home or refinance anywhere in CA.
