You may have heard the term "jumbo mortgage loan" and wondered what it meant. Well, I'll explain what it means and why it's important for you to understand it in this short article.
A mortgage loan is called a "jumbo mortgage loan" if it is for more than a certain amount. As of 2006, a "jumbo mortgage loan" is one that is for more than $417,000. Most of the time, the limit changes every year. The amount was $357,650 in 2005.
The good thing about a jumbo mortgage loan is that for most lenders, the approval process is the same as for regular loans. The interest rate on a jumbo mortgage loan is usually 1/4 percent higher than the rate on a regular loan, but this can change, and the difference seems to be getting smaller every year.
Since brokers are usually paid based on the size of the loan and a jumbo mortgage loan is bigger than a conventional loan, you should feel comfortable negotiating the loan rate with your broker or lender. I can't believe that people will negotiate the price of a $100 tyre but won't ask how much the broker gets paid for a $1,000,000 loan. A good mortgage broker is happy to talk about fees and usually likes to do so. So, there won't be any surprises or worries after escrow is over.
I recommend the following steps whenever you start the loan process, whether you are refinancing or buying a home:
- Look at the current mortgage rates on the Internet to get an idea of how the market is doing. Rates of interest change often, so this step is just to give you an idea. When looking at rates, make sure you are looking at the rates for jumbo mortgage loans.
- Fill out the loan application form completely and correctly.
- You should ask questions like how long they've been doing mortgage loans, if they do them full-time, how they price their jumbo mortgage loans, and what kind of education they have. If you ask these questions, you'll have a good idea of what the mortgage broker is like right away.
- Figure out what kind of loan you need and how much you think you'll need.
- Ask family or friends for a mortgage broker referral.
- If you can't get a recommendation, you should be careful and make a list of questions for the mortgage broker you're thinking about using.
- Find out if you need to get pre-approved for a loan.
If you work with a mortgage broker who has a lot of experience, the process will go very smoothly because the broker will be able to see problems coming and deal with them before they happen.
If you follow the steps in this article, you will be well on your way to getting a great jumbo mortgage loan and will build a long-term, trusting relationship with a mortgage broker.
