Alaska Purchase Mortgage Loans

February 10, 2009 7:06 AM | Alaskan Photo Tours

The current state of Jumbo loans

Are you thinking of buying a house that costs more than $ 400,000? Unless you are planning to a significant cash down payment on your new home, chances are you will have to apply for a jumbo loan. A jumbo loan is simply a mortgage loan property in the continental United States, which exceeds $ 417,000, if the funds are used to purchase a new home or refinance an existing mortgage. For Residents of Alaska, Hawaii, Guam and U.S. Virgin Islands, mortgages are not considered jumbo loans until they exceed $ 625,000.

Jumbo loans are simply mortgage loans made for amounts that exceed the limit of housing loans for adjustment, as determined by Fannie Mae and Freddie Mac, government sponsored entities are the two largest players in the secondary home loan market in the United States. For this reason, jumbo loans are sometimes referred to as non-conforming loans. Jumbo loans above (FHA) of the Federal Housing Administration's underwriting limits. This means that lenders who lend jumbo (1) can not sell the notes to either of the two largest secondary market lenders in the United States are (2) not eligible for protection of the FHA default.

Not all lenders offer jumbo loans. If you are planning to apply for a jumbo loan, it is important to reveal its intention to your loan officer immediately. Otherwise, you could find yourself losing a considerable amount of their time and professional of the mortgage with which they are working when the lender that he or she works for does not process non-conforming mortgage loans.

Costs and risks Jumbo loans

Because jumbo loans are considered one of the riskiest types of mortgage loans are more expensive to get and processing conforming mortgage. Lenders who write jumbo loans are taking a bigger risk than with traditional loans, so they usually charge higher interest rates for these types of mortgages that make conventional loans.

Lenders also incur higher underwriting the jumbo loan costs with small mortgages, and these costs are passed on to the borrowers. Part of the reason that the cost of underwriting the loan Jumbo is so expensive is related to the fact that these loans are not eligible for FHA financing.

In addition, organizations that sign loans jumbo is at risk of losing a lot of money if a borrower default. It can be very difficult for the guarantors to recover their losses by selling foreclosure house in this price range. There is a limited market for homes in the luxury price range, which means that there is a very real possibility that a house exclusion does not sell, or have to be sacrificed for much less than the outstanding loan balance.

Because the consequences of foreclosure jumbo loans are so serious that you are approved for this type of loan can be difficult. It is not uncommon for lenders who do not participate in the market for jumbo loans to use very strict guidelines for approving loans in this category. Solvency criteria are often more strict for jumbo loans for small, conforming loans eligible for FHA to back and can be sold on the secondary market with relative ease. In addition, many require jumbo loans a minimum down payment of twenty percent.

Impact of the mortgage crisis of 2007, on the Jumbo Loan Market

The current state Mortgage industry makes jumbo loans less attractive than ever for investors in the mortgage industry. One of the major concerns regarding the current situation jumbo loans is the fact that it can be even more difficult than usual for lenders to resell these loans to investors in mortgages. With players important both recovered from the mortgage crisis of 2007, the additional risk factors associated with jumbo loans are doing a lot of private finance companies investment reluctant to invest in non-conforming loan market.

Jumbo Loan State Implications for home buyers

In many parts of the country, the number of homeowners applying for jumbo loans is very limited. During most of the United States, the median home price is less $ 250,000, which means that only the purchases in the higher end of the housing market is likely to be candidates for jumbo loans.

However, in many large metropolitan areas, average house prices are significantly higher than the jumbo loan limit. In some parts of New York, California, Connecticut, Massachusetts, and many other states with high living costs, it is virtually impossible to find even a small house for less than the lower limit for loan programs jumbo.

In these areas, even buyers at the lower ends of the housing market to meet the challenges of financing for jumbo loans if they become homeowners. Not only must they cope with higher prices of housing in the country, must also pay a premium on mortgage financing even when selection moderate housing.

About the Author

Grant Eckert is a freelance writer who writes about topics pertaining to the mortgage industry such as Mortgage Company | Home Mortgage Lender

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