Refinancing A Jumbo Mortgage

Prior to the economic crash of 2008, Jumbo mortgages could be basically obtained from a broad range of lenders. As credit markets tightened, access to high balance mortgage products disappeared. The reason is that there is more risk associated with originating Jumbo mortgages, which caused lots of lenders to back out of the Jumbo market in the work of the financial crisis. The largest reason is the dearth of buyers in the secondary mortgage market, which increases risk and cost for lenders. Unlike conforming loan products, there is no government backed Fannie Mae or Freddie Mac to buy up high balance mortgages seven times a lender has originated the loan. This increases the chance that the originator may be left holding the loan, which reduces the amount of money they have obtainable to lend. In addition, expensive luxury homes are also difficult to evaluate due to a lack of sales comparables. Therefore, values tend to be more volatile.

The loan limit for conforming fixed rate mortgage products is $417,000, or as much as $729,750 if the property is located in a high cost area as determined by the Department of Housing and Urban Development. Loans in those high cost areas in excess of the $417,000 threshold are thought about Tremendous Conforming loans. Rates on Tremendous Conforming loans are slightly higher than regular conforming loans, but they provide the borrower with a 30 year fixed rate option that is difficult to find in the Jumbo market. Most Jumbo products obtainable today will be either 5/1 or 7/1 ARM's, and usually have lower Loan-to-Value requirements than similar conforming loans.

With that said, Jumbo loans are becoming more obtainable and requirements are easing as lots of lenders take on more risk. In the event you thought about refinancing your Jumbo mortgage historically couple years, but struggled, you may need to contact a mortgage professional to revisit the topic.

With rates likely to increase in the approaching months, it is recommended that anyone currently in a Jumbo ARM, refinance in to another ARM or possibly a fixed rate loan. This is the case for anyone who has an interest only loan or ARM that is due to fine-tune. Requirements for Jumbo mortgages vary widely from lender to the next, but if your loan amount is 65% or less of the appraised value, and you have 720+ FICO you ought to have no issue refinancing. Seven times loan amounts start to go over 65% Loan to Value or credit scores drop below 720 FICO, refinancing in to a high balance loan becomes more difficult. This is not to say that you would not be able refinance, but there will be fewer lenders to select from and the rate is likely to be higher. In addition to FICO scores and Loan to Values, the occupancy status and property type can impact the requirements to receive a high balance loan. For example, second homes and condos may need even lower Loan to Values and may be accompanied by higher rates.