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I am currently 5 years in a 30 year fixed 3.5% mortgage and looking to upgrade my primary residence. I live in North Jersey (high cost of living area) and looking into a jumbo mortgage to avoid draining all my bank accounts. To be honest, I am not mortgage savy given all of the variables -- buying points to reduce the mortgage rate seems foreign to me. To start, other than a higher rate, is there anything wrong with a jumbo mortgage?
I am currently 5 years in a 30 year fixed 3.5% mortgage and looking to upgrade my primary residence. I live in North Jersey (high cost of living area) and looking into a jumbo mortgage to avoid draining all my bank accounts. To be honest, I am not mortgage savy given all of the variables -- buying points to reduce the mortgage rate seems foreign to me. To start, other than a higher rate, is there anything wrong with a jumbo mortgage?
I would get with a loan officer in NJ so he/she can sit down and explain to you the differences. There is nothing "wrong" per say with a jumbo loan. Honestly, I've seen the rate being better or at least competitive to conventional loans (this may change with companies, however). The break down comes down to (please keep in mind that the following may change depending on the investor), jumbo loans may require you to have a lower debt-to-income ratio (I've seen around 43% or less requirements), reserves (at least six months of the mortgage payment - I've seen normally), no gifts or limited gift funds, all borrower need to occupy the property, credit lines minimum (at least 3 trades lines - with 24+ months history, some may require previous mortgage credit line history), use of business funds may be limited (if you have a business), etc.
It's harder to qualify, in a way. Not sure how your financials are but I'd definitely recommend to sit down with a loan officer and let him/her see which investor would work best for you.
I am currently 5 years in a 30 year fixed 3.5% mortgage and looking to upgrade my primary residence. I live in North Jersey (high cost of living area) and looking into a jumbo mortgage to avoid draining all my bank accounts. To be honest, I am not mortgage savy given all of the variables -- buying points to reduce the mortgage rate seems foreign to me. To start, other than a higher rate, is there anything wrong with a jumbo mortgage?
Need more info: value of your home now, what you want to do to it, projected value, cost of improvements.
You're talking about a cash-out Jumbo here and it is not likely you are going to see anything in the 3%s so you might consider a Second Mortgage depending on how much $$ you need.
Again, let us know how big your current mortgage is - I would sit on that 3.5% like a hen!
Current home selling for $670K and new home will be $1.2M and $340K down payment. Monthly gross is around $32K. Major expenses are 2 kids in school @ 2,500 and 2 car loans at $1,300. No debt.
I've gotten a few quotes at 4.375% for a jumbo with 20% down which surprised me as some products had same/better than the conventional.
If you take an 850K loan vs. 425K, both cost the same for the lender to put on the books, but the ROR is double on the 850K loan, so lenders skinny it down, and the rate is lower for the jumbo. Your post is from yesterday, so realize this data is time sensitive, but we are at 4.375% on jumbo and 4.625% on the conforming. Rates have been trending ever-so-slightly lower (until yesterday, edged up slightly), but that trend is tenuous, at best. If you are the type to be upset if the rate goes up, get locked in. If you play the market (float), what rate would you hope to get? Knowing how deeply jumbo quotes are discounted, it is my opinion you have a greater chance of rates going higher, than lower. The most I think you could hope for would be 4.25%.....but that's chasing a butterfly with a blindfold on.....possible, but not likely. Remember, your government wants higher rates, that should be your first hint.
I expected rates to be higher as FED recently raised rates. 4.375 works but doubt I can get it as closing is projected to be Aug 30th. I’m also reviewing the quotes as the low rates seem to have high fees.
Rates are influenced by what is perceived to be the future. Everyone betted on the Fed raising rates, then when it happend, rates went down. Bonds are very similar to the stock market. If you are familiar with "buy on the rumor, sell on the news," and apply this, you will understand this point, which is what happened here.
some banks prefer jumbo loans and give lower rates for them like citizens bank and investors bank
The lowest rate I was offered was 4.25 from Citizens and I've heard the same from other people. I am glad you mentioned it.
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