What to Consider Before Obtaining a Jumbo Mortgage
The size of the average home has increased by 1,000 square feet since the early 1970s. With the purchase of larger homes comes larger sales prices and the need for a jumbo mortgage.
Homebuyers in all generations are starting to want to purchase larger houses. Millennials are waiting longer than previous generations to begin buying homes, which is allowing them to purchase homes that are not the typical starter homes of the past. Baby boomers are beginning to purchase larger houses as they retire and prepare for spending more time in their homes.
Jumbo mortgages differ from location to location, but the average point at which a buyer needs to seek a jumbo mortgage is at $417,000 for a single family home.
Before jumping in to committing to a jumbo mortgage, consider these three things.
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Consider the Mortgage Options
While buyers are beginning to buy larger and more expensive homes, they are also moving more than in the past. The majority of homeowners will not stay in the house for the 30 years that it will take to repay the mortgage.
If you are planning on staying in your house for only a few years, consider obtaining an adjustable rate mortgage. These mortgages offer lower interest rates for so many years. If you know you will be selling before the rate increases, this can be the better mortgage option for you.
Fifteen-year mortgages are also growing in popularity. Talk to a mortgage lender to get all of your questions answered and select the loan product that is right for you.
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Refinancing Options
There are many options on the market for refinancing products. Some lenders will allow buyers to obtain a second mortgage at the same time as the first. There are also options that will allow buyers to obtain a home equity loan right after their mortgage. This can allow homeowners to have finances to spend on remodeling needs or other large purchases.
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Consider the Qualifications
Obtaining a jumbo mortgage has higher requirements for qualifications than standard mortgages. Before deciding to go this route, make sure that you will qualify for the loan that you need.
Many banks can respond quickly to you with pre-approval amounts. Find a lender that you trust and then see what options are available to you for jumbo mortgages or if they have any other recommendations.
The real estate market has improved. The prices of houses are increasing, which means it is becoming harder and harder to find those steals on big houses.
If you are looking to purchase a house that would require you to need a jumbo mortgage, get to work early. Before you get your hopes up, make sure that you will qualify for the loans that you need.
Talk to your lender about how long you plan on being in the house and ask them which loan products will make the most financial sense for you. The right product depends on your specific situation.