At Acceptance Capital we want to make sure that Americans living in the great state of New Mexico have easy access to home ownership. We specialize in understanding a potential borrower's needs and knowing the right options for the right client. For those looking to finance a home with a higher than average value, a jumbo loan is a great option.
A loan is considered a jumbo loan when it exceeds the conventional loan limits set by government sponsored lending enterprises such as Fannie Mae and Freddie Mac. Those looking to finance a home with a jumbo loan should expect higher interest rates than a typical conforming loan.
In an effort to help economic recovery, President George W. Bush signed the Housing Economic Recovery Act of 2008 into law which temporarily increased the loan limits for jumbo loans to $729,750 or 125% of the median home value in a given area depending on which is lower.
These higher limits were originally meant to expire after 2008 but were extended through 2010. Increasing loan limits was meant to lower interest rates, but it was not as successful as expected. The jumbo loan limits were lowered back to normal in 2011.
Interest rates for jumbo loans are based on a variety of factors, the most important of which is the risk to the lender. Jumbo loans typically require higher interest rates due to higher risk.
The risk is higher because if a jumbo loan defaults, it is more difficult to sell a higher valued property quickly for its full value. Also properties with higher values are more vulnerable to market value fluctuations. For these reasons, lenders typically require borrowers to pay a higher down payment.
Borrowers looking to finance a home through a jumbo loan will normally be required to meet higher requirements on parameters such as debt-to-income ratio, value of all assets, and FICO credit score.
Here at Acceptance Capital, we specialize in providing potential borrowers the knowledge needed to make the right decision when financing a home. Although we are located in Santa Fe, we dedicate ourselves to providing some of the most competitive jumbo loan rates throughout the entire state of New Mexico.
Please contact us for a quick and easy quote to make your dream of homeownership a reality!
Conforming loans are conventional loans that meet bank-funding criteria set by Fannie Mae (FNMA) and Freddie Mac (FHLMC). Both of these stock-holding companies buy mortgage loans from lending institutions and secure them for resale to the investment community. Every year, form October to October, Fannie Mae and Freddie Mac establish limits on what constitutes a conforming loan in a mean home price.
Buying back mortgage loans allow these agencies to provide a continuous flow of affordable funding to banks that reinvest their money back into more mortgage loans. Fannie Mae and Freddie Mac only buy loans that are conforming, to repackage into the secondary market – effectively decreasing the demand for non-conforming loans.
Conforming Loan Limits:
NOTE: The conforming loan limit in Alaska, Hawaii, Guam and the Virgin Islands is 50% higher.
There is talk of lowering conforming loan amounts which would make more loans fit into the Jumbo Loan category. we will be monitoring any changes to conforming loan limits. All loans over these amounts are currently Jumbo Loans.
Loan are divided into two basic types based on Loan
Size…Conforming Loans can be done either as Conventional Loans or as Government
FHA/VA/USDA loans…but the loan amount cannot exceed $424,500.00 in 2018 – To be
clear the price can exceed $424,500 only the loan amount is capped, so you can
add as much of your own money toward the down payment as you would like.
Once we exceed $424,500 we are in the Jumbo Loan area,
different set of investors, underwriting guidelines, rates and fees… usually
higher credit score and more income is required, sometimes reserves are
required for jumbo where conforming conventional only requires reserves on
investment properties and second homes.