A jumbo loan is any single loan amount over the conforming limit that complies with the guidelines by Freddie Mac and Fannie Mae. As of 2017, any mortgage worth more than $424,100 for a one-unit property in the contiguous U.S. belongs to the jumbo territory.
As with any part of the country, it can be hard to get approval for this type of home loan in Maryland. It carries greater risks than ordinary financial products. Dealing with a stricter process and shoulder slightly higher interest are expected.
Why should you consider applying for a jumbo loan when conforming programs offer the path of lesser resistance? Here’s what it allows you to do:
Buy a House in a High-Value Market
An expert from Primary Residential Mortgage, Inc. says a jumbo home loan in Towson can be your godsend to afford a luxury home located in upscale districts around the Greater Baltimore. Real estate prices vary among areas, which is obtaining two separate loans is not unusual for a large house purchase.
Borrowing a jumbo mortgage simplifies everything. If you have the credentials to qualify for one, you can loan the majority of the property’s price without digging deep into your own pocket.
Pay Less Money Down
As mentioned, a jumbo loan can save you from paying a large amount of money upfront. With little money down, you can expedite the sales process and cut the long wait time to buy your dream house.
Despite the current economic climate, you may still find lenders that provide 100% financing on about $1.5M deals. Although the universally acceptable down payment size is 20% of the property’s cost, it’s nearly impossible to save that amount for a home these days.
But then again, a zero-down jumbo mortgage may be convenient but not always advisable. It has its own pitfalls, which you ought to uncover and understand completely first.
Explore Many Options
Other than their loan amount size, marginally higher interest, and tough approval criteria, jumbo loans are just like any other mortgage on the market. They can come with fixed interest, an adjustable rate, or an interest-only payment scheme.
Just because you can qualify for a jumbo loan doesn’t mean you should get it without much thought. It can be a serious financial burden if you miscalculate its risks. To make the best decision, you must assess your situation over the long-term and explore other financial products at your disposal.