As a potential home buyer, you have all kinds of options for mortgages available to you. What's the best loan you can get for your circumstances, and the home you want to buy? Jumbo home loans in Fort Lauderdale may be just the thing you need. Here's everything you need to know about them, to help you decide.
What Is A Jumbo Loan?
Put simply; a jumbo loan is a home loan that exceeds the conforming limit set by Fannie Mae and Freddie Mac. This means they're usually above $424,100 in most areas of the US. In some states and counties, such as Los Angeles, they can go to and even exceed $700,000.
As these loans are larger than regular loans, you'll find that they are not eligible to be guaranteed or purchased by Fannie Mae or Freddie Mac. They also come with unique tax implications and underwriting requirements, which makes them different from regular mortgages.
Who Can Get A Jumbo Loan?
So, who's eligible for Fort Lauderdale jumbo home loans? If you're a high earner but haven't accumulated the amount of extra cash normally needed for a larger, luxury home purchase, you'll see that jumbo loans are built for you.
In finance circles, these buyers are known as 'HENRYs' - an acronym for 'High Earners, Not Rich Yet'. As these people earn more, they also build up better credit ratings and are therefore a safer bet for lending companies. They're also more likely to have retirement funds, which they have been contributing to for longer.
How to Qualify for A Jumbo Loan
If you think you're in the right category to qualify for a jumbo loan, you will have to go through a rigorous process to get one. First, you'll need to be able to prove you have a very low debt to income ratio. This is because an outside party will not guarantee your loan, so you're going to be a higher risk to most lenders. Your DTI will need to be under 43%, although preferably it should be nearer 36%.
You'll also need to show that you have the available cash to cover payments that will come up during the borrowing process. As with any home loan, you'll need to have proof of earnings which includes 30 days of pay stubs and W2 forms stretching back two years. If you're self-employed, you will need two years of tax returns and 60 days of bank statements.
Jumbo Loan Rates
Before you take out a loan, you need to know what the jumbo mortgage rates in Fort Lauderdale are. In the past, the general APR for a jumbo loan was higher than a regular loan, but the gap has been closing as of late. For example, Wells Fargo currently offers 4.657% APR on jumbo loans, as opposed to 4.99% on a standard 30-year loan.
Jumbo Loan Down Payments
To be able to get a jumbo loan, you must be able to pay the down payment on it. In the past, you may have had to pay as much as 30% of your home's full cost to get the loan. These days though, you could be looking at as little as 10 - 15%. This is because lenders are always eager to find buyers for their jumbo loan packages. As a customer, you're ideal as you're a high earner and have an excellent credit history.
Before you sign though, it's worth considering paying more on your down payment. If you do, you could avoid paying private mortgage insurance, as well as other perks. Talk to your lender to see what the benefits are for you.
Crunch the Numbers Before You Sign
You may be perfect for a jumbo loan on paper, but before you sign make sure that you're doing your homework. There are so many loan packages out there; you want to ensure you're finding the right one for you. For example, instead of getting a jumbo loan, you may be better off with two smaller, conforming loans. Talk to your lender about all your options.
A jumbo loan could be your ticket to buying your dream home. If this sounds good to you, find a lender who can walk you through all the options. Here at Nationwide Home Loans, we would be happy to answer any questions you have about applying for a jumbo loan.