A jumbo loan is different than a conventional home loan also called a conforming loan. A jumbo loan is a loan that is in excess of Fannie Mae guidelines. Fannie Mae’s limit can change each year but due to the decline in home prices it is unlikely to rise annually as it has done since 1999. The current conforming loan limit is $417,000 so a jumbo loan is a mortgage above $417,000. In addition, the interest rate is usually higher than a conforming loan and considered to have more risk to lenders.
A jumbo loan is considered a non-conforming loan. The majority of mortgage loans by lenders are conforming loans. Jumbo loans are a small percentage of the mortgages that are done.
Although most mortgage loans that are done in the USA are conforming there are high-cost areas that demand jumbo loans such as California, Florida, New York, and other high cost states.
If you are a resident of California and are searching for a jumbo loan approval, the internet is an excellent place to start your jumbo loan quest for a few reasons. One reason is there are many online lenders competing for your home loan so they are obliged to offer their low rates to get you as a client. As an example, a local mortgage company, who has a good flow of business, may not be as motivated to give you the lowest closing costs or the lowest available rates, when his competition is basically local. But, when you have a large group of online mortgage companies wanting your business, you are more than likely to get a better rate.
OK, I am convinced, so where is the best place to get a jumbo loan? There are numerous mortgages companies online who can offer you rate quotes from multiple mortgage companies or loan officers. These companies will be able to provide you with quotes from up to 4 different mortgage companies. This is an excellent way to find a low rate versus searching around in your local yellow pages. Always be certain to request a good faith estimate of closing costs from each competing mortgage company for comparison reasons. It may surprise you but sometimes a higher interest rate and lower closing costs may make more sense depending on your goals. This type of comparison can be provided by sophisticated loan officers and companies who can estimate home appreciation, your income tax bracket, your job income, closing costs, etc. scenarios, in a pro-forma type analysis. Getting the lowest interest rate does not always make the loan you want, the best deal. The lender can charge more in other places that you might not catch until closing.
