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Jumbo Refinance Home loans Can Be Approved If You're Prepared
You're considering a jumbo loan for any home refinance while rates are low but you have been told, "Do to not waste your time applying. Not now, since the banks aren't lending!" Most banks aren't too interested in approving jumbo loans. The jumbo loans are thought a higher risk loan, especially in a stagnant economy. Some banks may offer jumbo loans but their underwriting process is so strict that obtaining the jumbo loan to the closing table doesn't seem possible. There are some banks that handle jumbo loan efficiently and will hold these loans in their portfolio. Finding this kind of bank may be the initial step in your quest to have your jumbo loan refinanced. The best bank will have the widest array of terms and have the most flexible underwriting guidelines. There are more points that should be considered when choosing the right bank.
Despite the inherent risks posed by higher loans, the fundamentals of home loan underwriting still apply. Like mortgage 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 mortgage loan in which the loan size exceeds GSE's (Government Sponsored Enterprise such as Fannie Mae and Freddie Mac) limits. Currently, the GSE's loan limits are limited to $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 obviously the very first obvious difference between a typical mortgage and also the jumbo loan. With higher loan amounts comes a lower LTV (loan to value) Expect to have 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 look for a lender which has a number of options that may be tailored for your particular needs, whether you'll need a Thirty year fixed rate, a 15 year fixed rate or a 5/1, 7/1 or 10/1 hybrid ARM or interest only. The eye rates on these higher loan amounts aren't as high as some borrowers think they would be. They often are a tiny bit higher than conventional mortgage rates and in some cases they may be lower than some conventional loans after their rate adjustments.
Many borrowers have unique situations and also the bank that you should turn to is a that has a clear understanding of the distinctiveness of the higher loan borrower. For example, although many borrowers possess a standard salary and W2 income, there's a disproportionate number when compared to lower loan amount applicants that have a W2 income which include bonuses or commissions. With the higher loan values, there are also a bigger number of self-employed borrowers and professionals. Different calculations should be used for this type of borrower to allow for depreciation, depletion, bonuses and commissions. For a borrower's best shot at loan approval and efficiency, the larger loans require a bank that has a staff of underwriters and originators who've a greater skill set and training with this type of loan origination and underwriting.
In order to be approved for a jumbo loan, you must bring along support documentation. Income documentation, documentation of reserves, letters of explanation, tax documents, etc. In short, you'll need 2 yrs tax statements with all of schedules, one month's newest pay stubs, 8 weeks newest bank statements, schedule of real estate owned, newest statements of stocks, bonds 401k and IRA accounts. An expert loan originator who is familiar with this kind of loan will give you insight on which documents you'll need for the application.
