What the Heck is a
Jumbo Mortgage Loan?
August 6th 2006
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What is a Jumbo
Loan |
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You may have heard of the term jumbo mortgage loan and wondered what it
means. Well, in this short article I will take you through the meaning
and why it is important for you to understand it.
In basic terms, if a mortgage loan exceeds a certain amount, it is
considered a jumbo mortgage loan. Currently (as of 2006), a jumbo
mortgage loan is a loan more than $417,000. The limit typically changes
each year. In 2005, the amount was $357,650.
The great part about a jumbo mortgage loan is the approval process is
the same for conventional loans for most lenders. Unfortunately, the
interest rate for a jumbo mortgage loan is typically 1/4% higher than a
conventional loan but this does vary and the difference seems to be less
year after year.
Since brokers are typically compensated based on the amount of the loan
and a jumbo mortgage loan is a larger amount than a conventional, you
should feel comfortable negotiating the loan rate with your broker or
lender. I am amazed that people will negotiate a $100 tire purchase but
will fail to ask the broker compensation on a $1,000,000 loan. A good
mortgage broker is happy to discuss fees and in most cases appreciates
it. This way there are no surprises or concerns after escrow closes.
Anytime you start the loan process whether refinancing or purchasing a
home, I recommend the following steps:
1) Review current mortgage rates on the internet and get a feel for the
current market. Interest rates change frequently so this step just gives
you an idea. When looking over rates make sure you are reviewing jumbo
mortgage loan rates as there is a rate difference. 2) Assess your loan
needs and the amount you think you need 3) Ask family or friends for a
reference of a mortgage broker 4) If you cannot find a referral, you
should proceed cautiously and develop a list of questions for your
prospective mortgage broker. 5) Questions you should ask include: how
long have you been doing mortgage loans, are you full-time mortgage
broker, how do you price your jumbo mortgage loans, and what education
do you have. Asking these questions will give you a good first
impression of the mortgage broker. 6) Determine if you need to
pre-qualify for a loan 7) Complete the loan application thoroughly and
accurately
If you work with an experienced mortgage broker, the process will be
very painless as the mortgage broker will anticipate problems and deal
with them proactively.
If you follow the steps in this article, you are well on your way to
getting a great jumbo mortgage loan and will build a long-term trusting
relationship with a mortgage broker.
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