Today’s arena for jumbo financing can be a minefield, even for an experienced loan officer. This is why it’s important to work with a professional who can help you maneuver through the confusing financing process, so you can claim the perfect real estate.
Investor requirements vary so often within the jumbo world, that it’s critical to take the time to identify your goals. From there, it’s important to review each investor’s guidelines before you can act on what available options are best for your financial situation.
Jumbo financing consists of a mortgage loan in an amount above conventional conforming loan limits. Currently that limit is set at $417,000. These loans do not “conform” to Fannie Mae (FNMA) or Freddie Mac (FHLMC) loan guidelines.
Conventional conforming loans represent the maximum loan amount a homebuyer is eligible for from Fannie Mae or Freddie Mac. They are put in place by government-sponsored enterprises that deal with real estate loans. Once you go over this limit, the guidelines change drastically regarding loan-to-value, debt ratios, and property type.
There are several ways to avoid entering the jumbo arena, cash being the most common. A borrower can simply limit their loan amount to $417,000, and bring any additional funds to the closing. Of course, that sounds easy enough, but what if you don’t have the necessary money just lying around? You could possibly have another option, by having a first loan of $417,000 and adding a second loan for the difference.
Yes, this is a viable option, even with today’s mortgage environment. However, there may still be different requirements for the minimum down payment. The second loan may not have a fixed rate, but it might make a property that wasn’t a possibility before now one that you can potentially purchase.
To learn more about how a good loan officer can assist you with your financing process, here is a link to some of the loan officers our clients use. It is critical that you work with a professional that understands and knows your situation, and can work to find the best available options for you!