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Jumbo Refinance Mortgage Loans Could be Approved If you are Prepared
You're considering a jumbo loan for any home refinance while rates are low but you have been told, "Do not to waste your time applying. Not now, since the banks aren't lending!" Most banks aren't too keen on approving jumbo loans. The jumbo loans are considered high risk loan, particularly in a stagnant economy. Some banks may offer jumbo loans but their underwriting process is really strict that getting the jumbo loan to the closing table is impossible. There are some banks that handle jumbo loan efficiently and can hold these financing options in their portfolio. Finding this type of bank may be the first step inside your quest to have your jumbo loan refinanced. The right bank will have the widest array of terms and have the most flexible underwriting guidelines. There are other points that should be considered when choosing the best bank.
Despite the inherent risks resulting from higher loans, the fundamentals of mortgage loan underwriting still apply. Like home loans with amounts below $417,000, the 5 Cs of lending remain intact, (capacity, credit, capital, collateral, character.) So what's different with jumbo loan underwriting?
A residential jumbo loan is any home 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 home loan exceeding these limits is recognized as a jumbo loan. This really is of course the first obvious difference between a typical home mortgage and also the jumbo loan. With higher loans comes a lower LTV (loan to value) Have a much at least a 20% equity position on a rate/term refinance.
The loan terms will be different from lender to lender and it is always prudent to consider a lender which has a number of options that may be tailored for your specific needs, whether you need a 30 year fixed interest 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 aren't up to some borrowers think they'd be. They often really are a tiny bit higher than conventional mortgage rates and perhaps they may be less than some conventional loans after their rate adjustments.
Many borrowers have unique situations and also the bank that you should turn to is one which has a clear knowledge of the uniqueness from the higher loan borrower. For example, although a lot of borrowers possess a standard salary and W2 income, there's a disproportionate number when compared to lower amount borrowed applicants which have a W2 income which include bonuses or commissions. With the higher loan values, there's also a bigger number of self-employed borrowers and professionals. Different calculations should be used for this kind of borrower to allow for depreciation, depletion, bonuses and commissions. For any borrower's best shot at loan approval and efficiency, the higher loan amounts need a bank which has a staff of underwriters and originators who've a greater set of skills and training for this type of loan origination and underwriting.
In order to be approved for any jumbo loan, you must bring along support documentation. Income documentation, documentation of reserves, letters of explanation, tax documents, etc. In short, you will need 2 yrs tax returns with all of schedules, one month's newest pay stubs, 8 weeks newest bank statements, schedule of property owned, newest statements of stocks, bonds 401k and IRA accounts. An expert loan originator who is accustomed to this type of loan provides you with insight on what documents you need for the application.
