The Midwestern housing market spans pretty much the entirety of the home pricing spectrum. On the one hand, it isn’t at all difficult to find a great single family home for less than $250,000. But on the other, in certain high-end communities, that number could grow exponentially. In those areas where the cost of living and housing is higher than the average, many home buyers turn to Jumbo loan products in order to purchase their property.
Sure, we’ve all heard the term. It means BIG numbers, right?
What exactly IS a Jumbo loan?
A Jumbo mortgage loan is a home loan for an amount that exceeds what’s known as the “conforming” loan limit set by housing regulators (currently $484,350 in most of the Midwest). The conforming loan limits are set by the Housing Finance Agency, a federal agency which oversees both Fannie Mae and Freddie Mac. These loans are not for unlimited mortgage amounts, however – they do have caps, depending on the area of the country you live in.
How do I qualify?
To be honest, you’re going to go through much of the same paperwork as you would with a conventional mortgage. Some jumbo loan lenders will require two appraisals versus the standard single appraisal. And most jumbo mortgage loan lenders will be looking for higher than average credit scores and low debt-to-income ratios. We’re not saying you can’t get a Jumbo with a 600-something score. But a 700+ will definitely help get you a rate that's more manageable.
Anything else we should know?
Most jumbo loan lenders will require that prospective borrowers have a certain amount of cash reserves on hand to cover the mortgage payment, and will more than likely require a heftier down payment. However, Midwest Lending has Jumbo Loans available that offer down payments as low as 5%.
In the end, Jumbo loans are not for everyone. You’re going to need a solid financial history to get the rates and terms that are right for you. And while the loan process itself is very similar to a conventional product, you'll face more scrutiny from the lender. And you can’t blame them - after all, you’re borrowing a LARGE amount of money, and they're taking on extra risk.
Just call Midwest Lending, we'll sit down with you and see if Jumbo loans are an option for you!