With everything that is going on with the economy and real estate, chances are that you, like most Americans, won’t be able to buy a home without requiring some kind of loan. Even though loans are common in this day and age, jumbo loans don’t get that much talk. When you get a jumbo loan, you want to know that you are getting the best deal and working with the best people in that field.
LBC Mortgage is a company that provides real estate services such as residential mortgages, hard money lending, purchase money loans, and PHA Financing for California residents. California Jumbo loans are their specialty, having a network of experienced and reputable people ready to help you on your mission to find the best deal for you.
To fully understand whether or not you are getting the best deal for your jumbo loan or not, firstly, we need to go over what a jumbo loan is, what the terms are for a jumbo loan, and what you should keep in mind when getting a jumbo loan.
Jumbo Loan: What Is It?
With the prices of real estate continuously rising, chances are high that conforming loans won’t be enough for the real estate that you are interested in. This is what Jumbo loans are for. A jumbo loan is a type of mortgage used to finance real estate that exceeds a conventional conforming loan.
Currently, a loan up to $548,000 is considered a conventional loan in the majority of states. This is determined by the FHFA, or otherwise known as the Federal Housing Finance Agency. However, this amount varies from state to state, even county to country. For example, in the Bay Area, any loan over $822,375 is considered a jumbo loan.
Jumbo loans are sold to Fannie Mae and Freddie Mac – two government-sponsored enterprises that buy and sell bundled mortgage loans. Both enterprises were created as a means to make it easier for people to purchase homes with a loaning process behind them. However, Fannie and Freddie can’t guarantee these loans.
This means that the lender could experience loss when their client defaults.
What Do You Need for a Jumbo Loan?
Jumbo loans used to be extremely risky for lenders, and they are still somewhat risky, even today. This is why there is a much more extensive list of requirements that the lender needs to submit and fulfill before they can get considered for a jumbo loan. When applying for a jumbo loan, just know that you will need lots and lots of paperwork.
There is also a high chance that you need to submit some bank statements that will assure the lender that you can carry this loan out. For example, some lenders need to see that you already have the financial means to cover one year in mortgages. In most cases, you also need to make a downpayment of 10-20%. Sometimes, even 30%.
It’s also not uncommon to submit tax returns and to show more proof of cash reserves. This way, your chances are the highest to get approved for a jumbo loan.
How To Get the Best Deal for a Jumbo Loan?
Two things are of extreme importance when you want to apply to get a jumbo loan. Firstly, your credit score needs to be great. Most lenders need a credit score that is at least 700 or more. Secondly, you need to have a low debt-to-income ratio. If you want to get the best deal, it’s in your best interest to make sure that you fulfill these requirements.
Lenders will also look into your income, and ideally, you are someone who has a stable income that is more than sufficient to cover the monthly mortgage. Ideally, when getting a jumbo loan in California, you want to work with a company that specializes in jumbo loans in California.
The Better Your Finance, the Better the Deal You Get
Whether you are interested in a jumbo loan because you want to purchase luxury real estate or a home in an in-demand neighborhood, you want to make sure that you are getting the best rate that won’t affect your lifestyle significantly.
The best thing that you can do to ensure that you are getting a good deal on your jumbo loan is to prove that you are in good financial health. The better your finances are (credit score, bank statements, tax returns), the better the deal for your jumbo loan will be.