What is a Jumbo Mortgage Loan?

A Jumbo Mortgage loan is a loan that excides the federal conventional limit, which is set at $417,000 right now, and is regulated by Federal National Mortgage Association (Fannie Mae) or Federal Home Loan Mortgage Corporation (Freddie Mac), two federally chartered organizations. Fannie Mae and Freddie Mac will then buy underlying securities such mortgages and then in turn reinvest them in new mortgages creating a cycle of funds. These loans, however, are a high risk for lenders, which can make acquiring such deals hard to do. Increasing house prices have also caused a great number of Jumbo Mortgage loan applicants, creating even more havoc within the real estate/mortgage industry and even making it even harder for consumers to become approved. A fixed term for Jumbo Mortgage loans is 15 or 30 years, but it is not unheard of to set another term. It is possible to refinance your Jumbo Mortgage loan, but finding a lender that will do it will take some time and will also become very expensive, mostly due to closing costs. Any loan that you will wish to apply for and is over the federal comforting limit is considered a Jumbo loan, which will have a premium interest rate as well as some small print restrictions. The options for Jumbo Mortgage loans are very similar to traditional loan programs. Some differences have been that lenders will ask for a greater down payment of an additional 5% more then the other similar loans. Putting no money down for a Jumbo Mortgage is generally not an offer; instead the client has to pay a down payment of a minimum of 5% of the loan. Because these loans are very large a lender will typically offer variable loan programs to the client.