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Jumbo Refinance Home loans Can Be Approved If you are Prepared
You're considering a jumbo loan for a 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 keen on approving jumbo loans. The jumbo loans are considered high risk loan, particularly in a stagnant economy. Some banks may offer jumbo loans however their underwriting process is so strict that obtaining the jumbo loan to the closing table is impossible. There are a few banks that handle jumbo loan efficiently and will hold these loans within their portfolio. Finding this kind of bank may be the first step in your quest to have your jumbo loan refinanced. The best bank may have the widest variety of terms and also have the most flexible underwriting guidelines. There are other points that should be considered when choosing the best bank.
Despite the inherent risks posed by higher loans, the basics of mortgage loan underwriting still apply. Like mortgage 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 capped at $417,000.00 or $625,500 in Alaska or Hawaii. Any home loan exceeding these limits is recognized as a jumbo loan. This is obviously the first obvious difference between a typical mortgage and the jumbo loan. With higher loan amounts comes a lower LTV (loan to value) Have a much a minimum of a 20% equity position on a rate/term refinance.
The borrowed funds terms will be different between various lenders and it's always prudent to look for a lender that has a variety of options that may be tailored for your specific needs, whether you need a Thirty year fixed interest rate, a 15 year fixed rate or a 5/1, 7/1 or 10/1 hybrid ARM or interest only. The eye rates on these higher loans aren't as high as some borrowers think they'd be. They often really are a little bit greater than conventional mortgage rates and in some cases they may be lower than some conventional loans after their rate adjustments.
Many borrowers have unique situations and the bank that you ought to use is a that has a clear knowledge of the uniqueness from the higher loan borrower. For example, although many borrowers have a standard salary and W2 income, there's a disproportionate number in comparison with lower loan amount applicants that have a W2 income which include bonuses or commissions. Using the higher loan values, there's also a larger quantity of self-employed borrowers and professionals. Different calculations should be used for this type of borrower to match depreciation, depletion, bonuses and commissions. For any borrower's best shot at loan approval and efficiency, the higher loans require a bank that has a staff of underwriters and originators who've a higher skill set and training with this type of mortgage origination and underwriting.
To become 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 short, you'll need 2 yrs tax returns with all of schedules, one month's newest pay stubs, 8 weeks most recent bank statements, schedule of real estate owned, most recent statements of stocks, bonds 401k and IRA accounts. An expert loan originator who's accustomed to this type of loan provides you with insight on what documents you need for the application.
