The Right Lender For Jumbo Mortgages

Jumbo mortgages and standard mortgages are a lot alike but there are some key points that are worth explaining.

Jumbo mortgages are loans taken for high-priced property. The price is set by Fannie Mae and Freddie Mac for what qualifies as a Jumbo mortgage. In Colorado, and most of the United States, it is any mortgage that exceeds $417,000.

Fannie Mae and Freddie Mac buy the majority of real estate mortgages. They will not finance any loan greater than $417,000. Although, Alaska and Hawaii and a couple of other states are the exceptions. Because Fannie Mae and Freddie Mac don't finance the higher mortgages they are often sold to banks, insurance companies and other investment groups. The risks are higher with Jumbo mortgages, therefore the interest rates are higher too.

The amounts involved in a jumbo mortgage loan means there is more money that can be lost. This higher possible loss, along with a few other factors, results in higher jumbo mortgage rates than the rates of standard mortgages. The difference in percentage points on these loans can result in sizable payment differences. This difference is a major reason it is recommended that buyers shop around for the best interest rates and the best lender when looking for a jumbo mortgage loan.

Interest rates is only one thing to consider when looking for a jumbo mortgage loan. The additional fees and closing costs associated with it can actually raise or lower the interest rates. The lender with the higher interest rate could be the better value for the buyer when all of the additional fees and closing costs are taken into account too. Buyers should consider their goals and plans when shopping for a jumbo mortgage so they are ready for all available options. Like standard mortgages, jumbo mortgages offer several different options. Buyers can take out loans with adjustable rates with 3 or 5 year locked rates that adjust afterwards. Another option could be a 15 or 30 year fixed jumbo mortgage with unchanging rates.

The decision of which option is best for you, the variable or fixed jumbo mortgage interest rate, depends on your plans to stay in the home. Will you stay in the home for more than the locked in time, say 3 to 5 years like the above example, or will you refinance the loan within 3 to 5 years anyway?

The higher rates of jumbo mortgages should not frighten buyers away. The rates for well qualified buyers are only higher by a quarter of a point or so. Sometimes the jumbo mortgages are the only options for home buyers in many parts of the country because $417,000 is not that high a price in today's housing market. In fact, in some parts of the country it is the only option. For the best jumbo mortgage a buyer needs to find a reputable and experienced lender with good rates. A great mortgage lender is one who will take the time to understand your needs and can help you select the appropriate option available for your jumbo mortgage.