It's true that a lot of homebuyers in Palm Desert and Palm Springs are all-cash buyers, but that doesn't necessarily mean that someone might not need a jumbo loan from time to time. With home prices well over $1 million, a jumbo loan might fit the bill when looking to apply for a mortgage. So, what is a jumbo mortgage and when do you need one?
Prices have certainly gone up across the US and in many places the need for a jumbo mortgage is inevitable. A jumbo loan refers to loans that exceed the limits set by the government-sponsored enterprises that by most home loans and package them for investors. These jumbo mortgages are any loan that exceeds the dollar amount loan-servicing limits put in place by Freddie Mac and Fannie Mae. This also makes them non-conforming loans.
These limits are currently $453,100 in all states except for Alaska, Guam, Hawaii, and the US Virgin Islands where the limit is well over $600,000. The maximum loan amount can vary depending on which lender you choose. You can get a fixed or an adjustable-rate jumbo mortgage with different term options. These loans can be used for your primary occupancy home or even investment and vacation homes.
So how do you qualify?
Jumbo lenders usually have stricter underwriting requirements because they are not backed by Fannie Mae or Freddie Mac. There considered a risk your loan but lenders have more to gain since the dollar value is higher and they can offer additional services to those who qualify. Eligibility requires higher credit scores, greater reserves, and a larger income, naturally. FICO scores must be at least 700 but even those with lower can qualify if they have a low debt to income ratio.
Eligibility should also means that the borrower has enough reserves or assets to cover between six and 12 months worth of mortgage payments. The down payment on jumbo loans is also larger, typically 10 or 20%. Learn more about the 10% down payment jumbo loan
Obviously, the benefits of a jumbo mortgage means that you can afford a higher priced home but interest rates might be higher as well. They are a convenient way to finance higher-priced properties and instead of getting to conforming loans to finance the property, the jumbo mortgage eliminates the need.
If you're in the market for a jumbo loan on a higher-priced home throughout the Palm Desert real estate market, please give us a call. We have lenders that specifically work with jumbo mortgage applicants and could help you get the right loan and terms for your needs.