| A jumbo mortgages is a home loan that exceeds the | | | | A 30 year fixed jumbo mortgage is better for those |
| limits set by Fannie | | | | whole plan to own the home for a very long time. With |
| Mae and Freddie Mac. | | | | this type of mortgage, the rate will not go up but it will |
| How are jumbo loans different? | | | | never go down, either - it stays the same for the life |
| What differentiates jumbo mortgage loans is the loan | | | | of the loan. This is good because the payment is |
| amount. At present, loan amounts that are higher than | | | | predictable, and cannot rise sharply if interest rates do. |
| $417,000 are usually deemed jumbo mortgages. This | | | | On the downside, the 30 year fixed jumbo mortgage |
| determination is made by comparing industry standards | | | | rate is higher since lenders know they can never |
| for average housing loans as governed by the two | | | | charge more than the original rate. |
| biggest secondary mortgage lenders, Fannie Mae and | | | | The lowest jumbo mortgage rate is usually an |
| Freddie Mac. | | | | adjustable 30 year jumbo mortgage rate. Lenders |
| Fannie Mae and Freddie Mac set industry standards | | | | understand their potential to benefit from increases in |
| for 'conforming loans'; Home loans beyond those | | | | rates over time, so they are willing to lend at a lower |
| maximums are regarded as jumbo mortgages. These | | | | rate in the beginning. Although, the lower rate won't last. |
| two agencies cap the dollar figure for loans that they | | | | A variable 30 year jumbo mortgage rate will be fixed |
| will buy (that's where the $417,000 figure comes from). | | | | for 3 to 5 years, and then will adjust annually according |
| Larger loan amounts are funded by other investors | | | | to an index. Even small increases could mean |
| such as banks and insurance companies. Note that the | | | | significantly larger monthly mortgage payments. |
| dollar figure set to qualify jumbo mortgages differs by | | | | Going with an adjustable 30 year jumbo mortgage |
| locale, so the limit is higher in Hawaii and Alaska (and in | | | | rate works well when a buyer plans to move within |
| some other states). In the majority of the U.S., jumbo | | | | the 3 to 5 year fixed period. For a buyer more |
| mortgages are those larger than $417K. | | | | concerned with smaller initial payments, or who will |
| Available Terms - 15 Year Fixed, 30 Year Fixed, or | | | | likely refinance in the near future, the variable 30 year |
| Variable 30 Year | | | | jumbo mortgage rate is better than the 30 year fixed |
| Jumbo Mortgage | | | | jumbo mortgage. Why pay the higher fixed rate when |
| The terms for jumbo mortgages vary similarly to other | | | | the buyer knows this isn’t their long-term plan? |
| types of housing loans. Buyers can choose between | | | | All jumbo mortgage products - 15 year, variable 30 |
| variable rates, like 3/1 or 5/1 ARMs, for a 15-30 year | | | | year, or the 30 year fixed jumbo mortgage - have |
| jumbo mortgage, or a 15 or 30 year fixed jumbo | | | | their benefits. A trustworthy mortgage lender with |
| mortgagerate. | | | | experience financing jumbo mortgages is a buyer's |
| Whether a 15 or 30 year fixed jumbo mortgage or an | | | | best resource for determining which product is right for |
| adjustable rate is best for you will depend on your | | | | them. |
| plans and situation. | | | | |