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Jumbo Refinance Home loans Could be Approved If you are Prepared
You are considering a jumbo loan for any home refinance while rates are low but you have 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 thought a higher risk loan, especially in a stagnant economy. Some banks may offer jumbo loans however their underwriting process is really strict that getting the jumbo loan to the closing table doesn't seem possible. There are some banks that handle jumbo loan efficiently and will hold these loans within their portfolio. Finding this type of bank could be the initial step in your mission to have your jumbo loan refinanced. The right bank may have the widest variety of terms and have the most flexible underwriting guidelines. There are other points that needs to be considered when choosing the best bank.
Regardless of the inherent risks posed by higher loans, the basics of mortgage loan underwriting still apply. Like home loans with amounts below $417,000, the five Cs of lending remain intact, (capacity, credit, capital, collateral, character.) So what's different with jumbo loan underwriting?
A residential jumbo loan is any home 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 considered a jumbo loan. This is obviously the first obvious distinction between a typical home mortgage and also the jumbo loan. With higher loan amounts comes a lower LTV (loan to value) Expect to have a minimum of a 20% equity position on the rate/term refinance.
The borrowed funds terms will vary between various lenders and it is always prudent to look for a lender that has a number of options that may be tailored for your specific needs, whether you need a 30 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 loan amounts are not as high as some borrowers think they would be. They generally really are a little bit higher than conventional home loan rates and in some cases they might be less than some conventional loans after their rate adjustments.
Many borrowers have unique situations and the bank that you ought to turn to is a that has a clear understanding of the distinctiveness from the higher loan borrower. For instance, although a lot of borrowers have a standard salary and W2 income, there's a disproportionate number when compared to lower loan amount applicants which have a W2 income that include bonuses or commissions. With the higher loan values, there are also a larger number of self employed borrowers and professionals. Different calculations ought to be used for this type of borrower to allow for depreciation, depletion, bonuses and commissions. For any borrower's best shot at loan approval and efficiency, the larger loans require a bank that has a staff of underwriters and originators who have a higher set of skills and proper training with this type of mortgage origination and underwriting.
In order to be approved for any jumbo loan, you have to be prepared with support documentation. Income documentation, documentation of reserves, letters of explanation, tax documents, etc. In a nutshell, you will need 2 yrs tax returns with all of schedules, one month's newest pay stubs, two months newest bank statements, schedule of real estate owned, most recent 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 what documents you need for the application.
