A Jumbo Mortgage is a mortgage with a loan amount above conventional loan limits. Jumbo Mortgages apply when agency (FNMA and FHLMC) limits don't cover the full loan amount. Fannie Mae (FNMA) and Freddie Mac (FHLMC) are large agencies that purchase the bulk of residential mortgages in the U.S. They set a limit on the maximum dollar value of any mortgage which they will purchase from an individual lender. Currently, this limit is $417,000. This leaves a portion of the market to look elsewhere for placement. Other large investors, such as insurance companies and banks, step in to fill the need with maximum mortgage amounts going to the $1 million or $2 million range. The average interest rates are typically greater than normal for conforming mortgages, and vary depending on property types and mortgage amount.
Jumbo Mortgage for loan amounts up to $2,000,000, compared to conventional loan programs that are capped at $322,700
Because it is a fixed rate mortgage, you know exactly what your principal and interest payment will be each month. Because your interest rate doesn’t change, your basic payment doesn’t change.
The only exception to this is if you choose to pay your home insurance and real estate taxes through your mortgage. Then, if your insurance or tax rates change, that part of your mortgage payment will also change.
Jumbo Mortgage Protects you if interest rates go up, but you won't benefit if rates go down. You can, however, take advantage of falling rates by refinancing.
Use the jumbo mortgage to purchase a new property or refinance an existing loan. It can also be used on both primary or vacation homes
