Some years ago, with the real estate crisis, everything was chaos and even thinking about jumbo mortgage was absurd, actually, they went obsolete. But things have changed in the past few months and the business is once again stable. This opens the door to the possibility of jumbo mortgages once again.
Of course, one question is also on the table due to the historical situations and that question is “is a jumbo mortgage better than a conforming home loan?” well the answer is not that simple and you have to analyze a series of facts. That’s why here at melissjrealtor we want to help you through this question
What is actually a jumbo mortgage?
A jumbo mortgage is a payment plan for high valued properties. As you probably know (or maybe not), these expensive homes and buildings mortgage is not actually regulated so the rules to play are different.
So, even when the jumbo mortgage rates nowadays are practically the same than a home loan, it’s necessary to check all your options to decide which one is the lowest or more convenient rate for your jumbo mortgage.
What are the differences between a jumbo mortgage and a regular home loan?
Some years ago, the difference between these two kinds of mortgages was quite big, from half a point to 2 points of difference. But these days, those margins have been highly reduced and even when jumbo mortgage still represent a little bit more interests than conforming mortgages, the opportunities in real states with a jumbo mortgage are so much more accessible than ever.
ARMs are a good option if you have a large loan, because the rates can be significantly lower than with a fixed-rate jumbo loan. It’s important to remember that the rates in the jumbo mortgage can vary incredibly from a lender to another, but in general terms this is true.
What is undeniable is that the tiny differences in interests can represent a lot of money when we’re talking about bigger balances. Also, this jumbo ARMs count with an introductory period where the rates are fixed but if you only keep it in the introductory period, you won’t have to deal with the fixing.
If the conforming loan rates are lower
Well, when the conforming loan rates are lower, then it’s time to think of a “piggy-back” mortgage which is nothing more than a mixed mortgage when you start with an initial conforming mortgage and a second smaller mortgage.
This can actually save you some money as you can calculate the sum of interests of both mortgages in the piggy-back. And the sum of it is the total of the interests you will be paying, are they higher or lower than the jumbo mortgage rates? If higher, then go for the jumbo, if lower, then go for the piggy-back and save a couple of bucks.
Posted by Randy Blakeslee - GetnSocial
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