What They are
Jumbo loans are one example of a conventional loan that does not meet Fannie Mae or Freddie Mac guidelines. A jumbo loan is a loan that exceeds the maximum price of $417,000 for a first mortgage. The average interest rates on jumbo mortgages are typically higher than those for conforming mortgages as they generally are considered higher risk due to the larger amount of money that is being borrowed.
AnnieMac Home Mortgage offers jumbo fixed rate loans and adjustable rate loans:
With a fixed rate loan, your rate is fixed and your payment remains the same throughout the length of your loan (i.e. 30-years, 20-years, 15-years or 10-years) A fixed rate loan is an excellent choice if you plan to live in the home for many more years.
With an adjustable rate loan, your rate will adjust and your payments will fluctuate based on changes in the market. However, the rate and payment remains unchanged during the introductory period which could be 5, 7 or 10 years. The initial rate for an adjustable rate mortgage is usually lower than that of a fixed rate loan. After the introductory period expires, the interest rate is subject to adjust at predetermined periods, usually every six months. The rate adjustments are based on market interest rates and the adjustment caps limit how much your interest can adjust in a specified period of time. An adjustable rate mortgage is a great choice if you don’t plan to own the home for a long period of time.
The Details are Important
Loan to value ratios are often overlooked by home buyers. For most, the interest rate and loan term are the more important items. However, the loan to value ratio is a key factor in your application. Loan to value ratios vary depending on the type of property you are looking to purchase.