Jumbo Mortgage

First Central Mortgage Funding is Offering the Jumbo Mortgage

The jumbo mortgage is typically used to purchase high ticket items like large homes where an average sized loan just won't fit the bill.

At First Central Mortgage Funding, we are motivated to meet the individual needs of our clients. One of our client's major needs is convenience. Convenience is certainly a chief attribute of the jumbo mortgage while it is true that it comes with a slightly higher interest rate.

The Long and the Short of the Jumbo Mortgage

Financial ventures carry risk and must be entered into cautiously. We, at First Central Mortgage Funding, feel that it is our central duty to inform our clients of the the benefits and risks of the opportunities that we offer. It is our obligation to share as much information as we can which is relevant to you and will keep you safeguarded. A little recent history would be a good start...

Traditionally, in the United States, a jumbo mortgage refers to that which has a loan amount above what is defined by industry-standards regarding conventional conforming loan limits. These definitions are set by the two major secondary market lenders, Freddie Mac and Fannie Mae. Loans above what are deemed conforming limits can be made available by seller services of these institutions, (including Wall Street channels that offer warehouse financing to lenders).

We note that these loan amounts indicate average loan sizes across the country. The jumbo mortgage applies when Fannie Mae (FNMA) and Freddie Mac (FHLMC) limits don't cover the full loan amount. FNMA and FHLMC buy the bulk of residential mortgages in the United States. A limit is set on the maximum dollar value of any mortgage loan that is purchased from an independent lender.

Bear with us and you will understand where the term jumbo mortgage loan came from.

In 2010 the limit is set at $417,000 across the United States except in 197 designated high-cost regions in the U.S. Which represents 6% of the country. Insurance companies and banks are happy to fill the need, with maximum mortgage amounts going to the $1 million or $2 million range. A loan in excess of $1,000,000 is referred to as a super jumbo mortgage.

That, as we say at First Central Mortgage Funding, is the long and the short of the jumbo mortgage and the super jumbo mortgage.

At a Difficult Time First Central Mortgage Funding Makes it Easy for You

The jumbo mortgage has surged in popularity over the last decade, mostly due to the massive increase in easy credit that has also made conforming loans easier to get. Yet the jumbo mortgage loan is rare, particularly in the current lending environment.

Before we pursue this topic, we want to make a distinction between the conforming mortgage and the jumbo mortgage. This is based on the size of the loan, because loans above a certain ceiling are considered riskier. The exact thresholds vary region by region, according to local housing price levels. In most cases, the limit for a conforming mortgage is $417,000, while in Los Angeles it is $729,750. Anything above must be financed using a jumbo mortgage.

When you are buying a home you should know the difference. You should try to negotiate your home purchase below the cutoff, in order to make the financing process easier. The first thing that we, at First Central Mortgage Funding, want you to notice when shopping for a jumbo mortgage is that they tend to be adjustable rate loans. When interest rates go low, that works to your advantage. When they rise, this will make your already expensive mortgage that much more expensive. The second thing we want you to realize is that down-payment expectations are far more rigid; in order to obtain your jumbo mortgage, you should be prepared to put down at least 20% in equity. Be aware that, by comparison, 3.5% is required with FHA conforming mortgages.

Lending standards for the jumbo mortgage are certainly stricter. You will probably find that you are rejected if your monthly mortgage payment exceeds 35% of your income. You should have an impeccable credit rating, and be prepared to thoroughly document your income and assets when making your application.

Information is your friend. That is what we, at First Central Mortgage Funding, are here for. The more knowledge that you have about these types of loans, the more you will be prepared, protected and successful.