The best chance at getting a jumbo loan for a great price revolves around making the right choice of lender the first time.
Jumbo loans are mortgages that exceed the standards set by housing finance corporations like Fannie Mae and Freddie Mac. These and other standards make it easier for millions of Americans and the lenders they work with to obtain financing to purchase a home. However, there are drawbacks to the system. There needs to be a better jumbo loan fit for the modern homebuyer, especially the first-time buyer.
Formerly synonymous with risk, the norms and expectations around jumbo loans are shifting. Bankrate explained that until recently, jumbo loans tended to come with much higher interest rates than conventional loans, if they were even offered at all. This has begun to change as methods for analyzing risk have improved among the most innovative lenders. While jumbo loans may come with more strict requirements, they are now easier to earn approval for and even more affordable than was formerly the case.
That development is particularly helpful for homebuyers given the current state of the U.S. housing market. Home prices have increased significantly in recent years as the overall economy has improved and demand runs higher Although Fannie Mae and Freddie Mac consistently update their loan limits to reflect economic trends, 2018 saw a sizeable increase in the dollar amount that separates conventional mortgages from jumbo loans. The non-jumbo loan value limit for 2018 was set at $453,100 for single-family homes in the majority of counties in the U.S. But the limit goes as high as $679,650 for certain areas where housing costs are much higher than average, including cities like San Francisco and Washington, D.C. It may be even higher for a small sliver of counties in states like Hawaii, for example.
Why it's still important to shop around for jumbo loans
While jumbo loans may be easier to come by today, experts who spoke with Bankrate noted that hopeful buyers should still shop around for the best lender and the right deal.
"Though the barrier of entry for any loan has been raised from the 'stated income' days, quality borrowers will not find it difficult to secure a jumbo loan," according to James Campanella, chief operations officer for City National Bank of Florida in Miami, who spoke with Bankrate about jumbo loan trends.
When applying for a jumbo loan, higher credit score requirements and more stringent financial verification protocols should be expected. However, that doesn't mean it isn't possible to shop around for a lender offering better deals on interest rates and closing costs. Lending standards or methods for analyzing credit history can differ from one lender to another, making it important to carefully research your options before applying for a jumbo loan.
Perhaps the best chance at getting a jumbo loan for a great price revolves around making the right choice of lender the first time.
Speak with one of our Loan Officers to learn about our SmartEdge home loan program a nontraditional jumbo loan designed for today's homebuyers, even first-time buyers.