You might have heard of jumbo mortgage rates in Beverly Hills, Michigan, but you’re not sure if they’re right for you. The professionals with Gem Home Loans are ready to explain how they work in language that’s easy to understand. That doesn’t mean that we’ll ever talk down to you. We have far too much respect for our clients to ever do that. What we will do is give you the benefits and disadvantages, making sure you have the information you need to make the smartest choice.
As the name implies, a jumbo loan is larger than conventional loans. Since it involves an amount of money that’s larger, it’s usually harder to obtain. But a jumbo loan might be just right is you want to buy a home that’s bigger than the one you currently have, or you’re interested in moving to an area of town with higher home prices.
Jumbo loans aren’t like government loans, such as those run by the FHA (Federal Housing Administration). You have a lot more flexibility with a jumbo loan. You can use it to buy your main home, an investment property, or you can use it to buy a vacation residence.
There are a lot of other differences between jumbo and “regular” loans, but there are also a lot of similarities. For instance, jumbo loans come in fixed-rate or adjustable-rate alternatives. However, the rates you’ll be paying will more than likely be higher.
In most areas of the United States, jumbo loans have higher limits than conventional loans. The conventional loan limit is set at $550,000. However, in many bigger cities, as well as in Alaska and Hawaii, that limit jumps up to $820,000. So, if you plan on buying a home in Michigan that’s valued at more than $550,000, then a jumbo loan will probably be your only option.
In addition to limits, there are also differences in rates with a jumbo loan. They tend to fluctuate more than you’ll find with a conventional loan. That difference is typically at least .5 percent, but can also be more. That means the interest portion of your monthly mortgage payment will probably be quite a bit more.
That doesn’t mean there aren’t some substantial benefits to pursuing a jumbo loan. One of the best is that if you can qualify, you’ll be able to afford a much bigger home than the one you’re in. You more than likely wouldn’t be able to do that if you went for a conventional loan.
Since jumbo loans are riskier than conventional loans for lenders, they’re obviously harder to get. Not only will you need a pretty big bank account, you’ll also need to have a really good credit score. There are some instances where people can qualify with a score of 660. But most borrowers need to be closer to 740.
If you have a score lower than that, debt-to-income ratio will need to be low. Also, you can expect to have to make a down payment of about 10-20 percent, and you’ll need to show your liquid assets will be enough to cover anywhere from six months to a year of mortgage payments.
Learn more about jumbo mortgage rates in Beverly Hills, Michigan and more by calling Gem Home Loans at (248) 780-1030 or contacting us online.