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Mortgage FAQ: How is a Jumbo Loan Different than a Regular Loan?
"I’M BUYING A LARGER HOME THAN I HAVE NOW AND MY BROKER SAID I MAY NEED A JUMBO LOAN. I KNOW THAT A JUMBO LOAN IS A MORTGAGE FOR A HIGHER AMOUNT, BUT HOW ELSE IS IT DIFFERENT THAN A REGULAR LOAN?"
A jumbo loan is a mortgage that exceeds certain limits set by Fannie Mae and Freddie Mac. Generally, that limit is between $424,100 and $636,150, with $424,100 being the most common amount in most areas of the country. In high-cost or “competitive” real estate markets, the limit is at the high end of that range. Besides being a loan for a high amount, the main difference between a jumbo loan and a conventional loan is that a jumbo loan has more stringent underwriting requirements. This is due to the fact that jumbo loans are not backed by Fannie Mae and Freddie Mac, although jumbo loans do fall into the category of “qualified mortgages,” which are loans that have certain terms and rules to protect the borrower.
To qualify for a jumbo loan, you may need a very good credit score, an excellent credit history, and a larger down payment. Jumbo loans may also have higher standards in terms of proof of income, assets, and debt-to-income ratio. Like any type of mortgage, the requirements for jumbo loans may vary by mortgage provider, so make sure to check with your broker to see what the requirements are.
For more than 25 years, Omega Financial has been serving mortgage clients in Massachusetts. Our brokers have approximately 50 years in the mortgage business. You always will receive fast, courteous, and accurate information. Omega Financial, Inc. is a company duly licensed to operate in Massachusetts as a Mortgage Brokerage. We are located in the Town of Norwood, Massachusetts where we have been operating as Omega Financial Incorporated since 1988.
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