Jumbo Loan Refinancing
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What is Jumbo Loan Refinancing?Let's take the mumbo-jumbo out of the jumbo loan refinancing package. A jumbo loan, by definition, is a mortgage with a total amount that exceeds conforming loan limits set by lenders. Conforming loan limits are traditionally established by agencies like Fannie Mae and Freddie Mac that buy mortgages on the secondary market.
In today's economy, with many properties already exceeding the conforming limits, homeowners are turning to jumbo loan refinancing to boost buying power or retire mortgages that no longer suit their goals. The relatively high risk of defaults associated with jumbo loan refinancing means that lenders will probably charge higher interest rates. But not always: that's why it pays to shop around.
Jumbo Loan Refinancing in a NutshellA jumbo loan that refinances your home can be either a fixed rate loan or adjustable rate mortgage. Because of the size of the loan, you may find the adjustable rate preferable from the outset if you can find a lender.
Because of the susceptibility of "luxury" property to market fluctuations, some home lenders may require large down-payments. It's not uncommon to find a down-payment connected with a jumbo loan to rise as high as 5 percent on a refinancing loan up to $350,000 and 10 percent on a home loan up to $650,000. On the plus side, some lenders offer mortgages with longer amortization life in a jumbo refinancing package, allowing borrowers to enter 40- or 50-year terms.
The 2006 limits set for conforming loan amounts set by Fannie Mae and Freddie Mac are $417,000 for a single-family home, $533,850 for double-family homes, $645,300 for three-family homes, and $801,950 for four-family homes. Conforming limits are twice the above levels for homes in high-priced housing states and territories, including Alaska, Hawaii, the Virgin Islands, and Guam.
Closing costs for jumbo loan refinancing packages also can be comparatively high. Speak with a variety of lenders to find whether a jumbo loan is for you, or if you'd benefit from a more conventional second mortgage in combination with other options including debt consolidation.