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Jumbo Refinance Mortgage Loans Could be Approved If You're Prepared
You are considering a jumbo loan for any home refinance while rates are low but you've been told, "Do to not waste your time 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, particularly in a stagnant economy. Some banks may offer jumbo loans however their underwriting process is so strict that getting the jumbo loan towards the closing table is impossible. There are some banks that handle jumbo loan efficiently and will hold these loans within their portfolio. Finding this type of bank may be the first step inside your quest to have your jumbo loan refinanced. The best bank will have the widest variety of terms and have the most flexible underwriting guidelines. There are more points that should be considered in choosing the right bank.
Despite the inherent risks resulting from higher loan amounts, the basics 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 for example 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 is obviously the first obvious distinction between a typical home mortgage and the jumbo loan. With higher loans comes a lesser LTV (loan to value) Have a much at least a 20% equity position on the rate/term refinance.
The loan terms will be different from lender to lender and it's always prudent to consider a lender which has a variety of options that may be tailored for your specific needs, whether you need a Thirty year fixed rate, a 15 year fixed interest rate or a 5/1, 7/1 or 10/1 hybrid ARM or interest only. The eye rates on these higher loans aren't up to some borrowers think they'd be. They generally really are a little 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 ought to use is one which has a clear understanding of the uniqueness of the higher loan borrower. For instance, 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. Using 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 a borrower's best shot at loan approval and efficiency, the larger loans require a bank which has a staff of underwriters and originators who have a greater set of skills and training for this type of mortgage origination and underwriting.
To become 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 two years tax returns with all of schedules, one month's newest pay stubs, two months newest bank statements, schedule of real estate owned, newest statements of stocks, bonds 401k and IRA accounts. An expert loan originator who is accustomed to this kind of loan provides you with insight on which documents you need for the application.
