Jumbo Loans: Local vs. Big Bank
The American housing market continues to climb upwards in the wake of COVID-19. All across the country home buyers are putting their properties up on the market after spending quarantine time making improvements. Many buyers are now willing to spend above asking price in hot markets as supply remains low while demand increases. During this exciting time, our experts at Mortgage Maestro Group have noticed an increase in questions about jumbo loans. What are they? How are they different from conventional loans? Should I talk to my bank about a jumbo loan? Consider this quick primer on the topic if you are interested, and learn why banks may not be your best option for jumbo loans.
WHAT ARE THEY?
The majority of home mortgages in America are purchased from banks by federal entities, known as Fannie Mae and Freddie Mac. This allows banks to free up liquidity rather than holding these mortgages on their books. The majority of these loans are called conforming loans, which means that they conform to the guidelines of these government-sponsored buyers (Fannie and Freddie). These guidelines include a host of different factors like interest rates, credit ratings, down payments and debt-to-income ratios. Not so surprisingly, loans which do not meet these criteria are called non-conforming loans. But, more importantly, many loans are non-conforming because they are simply too large. Fannie and Freddie set an upper level on the loan balances they will serve, and any loans over that limit are known as jumbo loans. All of this is a roundabout way of saying that jumbo loans are larger than most other mortgages. There are some specific differences beyond that, but for now we will move on.
WHY THE INTEREST?
As you can imagine, with home prices increasing around the country there have been more buyers entering the market for jumbo loans. Our team at Mortgage Maestro Group answers questions every day about these loans and the best way to purchase them. Buyers want to know if they should be looking at properties over or under the jumbo limit, and how that distinction impacts interest rates and down payments. We have found that some folks tend to associate these loans with higher interest rates, but today jumbo loans are often as competitive as or more competitive than conventional loans.
DON’T ‘BANK’ ON IT
After discussing credit requirements, down payments and different interest rates, our customers want to know about purchasing. Our experience over the years has been consistent. Buying a jumbo loan with Mortgage Maestro Group is more cost effective than using a standard bank. The average down payment at a large or community bank could be as high as 20-30% down. Whereas Mortgage Maestro Group has options with 10% down and no mortgage insurance. Large banks love to include small fees on real estate transactions, and as you can imagine those tend to increase for larger purchases like jumbo loans. Banks are also less likely to offer prospective buyers flexibility when it comes to down payments and interest rates. Our team is here to provide you with the best possible mortgage on the market, and Mortgage Maestro Group is not hamstrung by the boilerplate applications and out of date lending practices in place at banks. Flexibility is what we offer to all of our clients. There is also the nature of jumbo loans to consider. Our concern is only getting the best value for our . We can even help strategize so that you can leverage your purchase so that your assets continue to work for you in the vehicles you prefer. Especially with historically low interest rates.
Have questions about a jumbo loan through Mortgage Maestro Group? Contact us today!