A jumbo mortgage loan is one whose total amount is over $417,000 – Loans above this threshold are only slightly different than those below, yet those differences can be dramatic to borrowers unfamiliar with such a marketplace. It is also important to note that the ceiling for standard mortgage loans as opposed to Jumbo loans is not set in stone and is therefore subject to change at any time. This amount is decided by the two largest lending organizations in the Untied States, Freddie Mac and Fannie Mae.
One of the most significant differences with a jumbo mortgage loan will be the interest rate – Since lenders consider homes with sale prices above the threshold to be luxury residences, they have presented a potential concern regarding successful resale of such homes, as well as an indication that appraisal values in this category do not increase as steadily as those homes below the jumbo cap. For this reason, the lenders imply that they are taking on more risk with such places, therefore higher interest rates are required to offset such liability.
Right alongside the higher interest rate will be a higher down payment requirement – It is almost...
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