Jumbos and Super Jumbos, the Best Choices for Large Mortgages

Usually people looking for jumbo and super jumbo loans have unique financial situations, so some lenders are offering completely individualized loans. It is important that borrowers make their needs known. Don’t be afraid to ask questions—lenders provide not only loans but service.

A jumbo mortgage is a loan that goes beyond the conventional loan limits determined by Fannie Mae and Freddie Mac, the agencies who set the limits for mortgage amounts. Currently the limit is $417,000, up from $133,250 in 1986. Jumbos and super jumbos start above the conventional limit and can go as high as $10 million.

With the value of houses in the U.S. continuing to rise, jumbo loans have also risen as a percentage of the total mortgage market. According to the newsletter Inside Mortgage Finance, in 2003 the total U.S. mortgage market was $3.76 trillion and of that $660 million was in jumbo loans. Since home interest expenses are deductible up to $1million and given the ever-increasing demand for jumbo loans, some lenders are offering a wide range of these kinds of loans, including a no doc loan (no documentation loans), a no income loan, adjustable rate and interest-only mortgages and more. Typically, a full documentation jumbo loan will have an interest rate .25-.5% higher than a conventional conforming loan and may require that the borrower have reserves to cover 6-12 months of all monthly debts.

Some things to look for in jumbo loans:

Full doc super jumbo first mortgage

This is usually the best choice and you can get a 10 year fixed rate (30 year amortization) with a 10 year interest only option. If you have an ARM, this is a good option.

No doc loans, no income loans and stated income loans

Borrowers who want privacy or just prefer the simplicity of a loan process that doesn’t require tax returns or income and asset statements like these types of loans. Rates are typically higher (.125-.25%) than full documentation loans.

No prepayment penalties, no negative amortization and no fees for waiving escrows and impounds.
Interest only loans
100% financing

Remember, when shopping for mortgages, it’s not just the interest rate. Find a mortgage package and lender that works for you.