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Jumbo Refinance Mortgage Loans Can Be Approved If You're Prepared

You're considering a jumbo loan for any home refinance while rates are low but you've been told, "Do to not waste your time and effort applying. Not now, because the banks aren't lending!" Most banks aren't too interested in approving jumbo loans. The jumbo loans are considered a higher risk loan, especially in a stagnant economy. Some banks may offer jumbo loans however their underwriting process is really strict that getting the jumbo loan to the closing table is impossible. There are a few banks that handle jumbo loan efficiently and can hold these loans within their portfolio. Finding this type of bank could be the initial step in your mission to have your jumbo loan refinanced. The right bank will have the widest array of terms and also have the most flexible underwriting guidelines. There are other points that needs to be considered in choosing the right bank.

Despite the inherent risks resulting from higher loans, the basics of home loan underwriting still apply. Like home loans with amounts below $417,000, the five Cs of lending remain intact, (capacity, credit, capital, collateral, character.) So what's different with jumbo loan underwriting?

A residential jumbo loan is any mortgage loan where the loan size exceeds GSE's (Government Sponsored Enterprise for example Fannie Mae and Freddie Mac) limits. Currently, the GSE's loan limits are capped at $417,000.00 or $625,500 in Alaska or Hawaii. Any mortgage loan exceeding these limits is recognized as a jumbo loan. This really is of course the first obvious distinction between a standard home mortgage and also the jumbo loan. With higher loans comes a lesser LTV (loan to value) Have a much a minimum of a 20% equity position on a rate/term refinance.

jumbo mortgage rates

The loan terms will vary from lender to lender and it's always prudent to look for a lender that has a variety of options that may be targeted at your specific needs, whether you need a 30 year fixed rate, a 15 year fixed interest rate or perhaps a 5/1, 7/1 or 10/1 hybrid ARM or interest only. The interest rates on these higher loan amounts are not as high as some borrowers think they'd be. They often are a little bit higher than conventional home loan rates and perhaps they may be less than some conventional loans after their rate adjustments.

Many borrowers have unique situations and the bank that you should turn to is one that has a clear understanding of the distinctiveness from the higher loan borrower. For example, although a lot of borrowers possess a standard salary and W2 income, there are a disproportionate number when compared to lower amount borrowed applicants that have a W2 income that include bonuses or commissions. Using the higher loan values, there are also a bigger number of self-employed borrowers and professionals. Different calculations ought to be used for this type of borrower to match depreciation, depletion, bonuses and commissions. For any borrower's best shot at loan approval and efficiency, the higher loan amounts need a bank that has a staff of underwriters and originators who have a greater set of skills and training for this type of mortgage origination and underwriting.

In order to be approved for any jumbo loan, you have to bring along support documentation. Income documentation, documentation of reserves, letters of explanation, tax documents, etc. In short, you'll need two years tax statements with all of schedules, one month's newest pay stubs, two months newest bank statements, schedule of property owned, most recent statements of stocks, bonds 401k and IRA accounts. A professional loan originator who's familiar with this type of loan provides you with insight on what documents you'll need for the application.