Why Get Utah Jumbo Loan to Finance Expensive Properties If you are searching for an expensive home or live in an area where housing costs are higher, a traditional loan may be too limited. In such a situation, a jumbo loan could be the solution. When shopping for a costly home or an average house in a lavish area, you have probably heard the term jumbo loans. Jumbo loans or non-conforming loans are reserved for buyers that need to borrow a large sum of money than the conventional loans for owning a house. The conventional loan limit is set by government-sponsored entity Fannie Mae and Freddie Mac. Jumbo loans are available in both fixed interest rate and a variety of adjustable rate terms.
To qualify for a jumbo loan, you need to have bigger cash reserves and a higher credit score among other things. Your jumbo loan limit generally depends upon how much your lender agrees to loan. Since jumbo loans are not guaranteed by Fannie and Freddie, these are considered riskier for lenders. If a borrower defaults, the lender will be on lose. How to Qualify for a Jumbo Loan?
The three most common challenges borrowers must overcome to get a jumbo loan approval are greater reserves, larger income, and higher credit scores. If you are applying for a jumbo loan, your lender may require you to fulfill underwriting criteria. •
•
•
•
•
Credit Score – You need to have a higher FICO score for considering a jumbo loan. Your lender requires a minimum 680 credit score and sometimes as high as 720 credit score. Credit qualifying criteria are very strict which include scrutinizing your income and credit profile. Debt-to-Income Ratio – To approve your jumbo loan, your lender will consider checking your cash reserves and debt. By determining that you have cash reserves and not too much debt, your lender is more like to approve your non-conforming loan. Cash Reserves – If you have enough cash reserves in the bank which shows that you can cover mortgage payments, you are more likely to get an approval on a jumbo loan. Down Payment – You will be required to make larger down payment which may vary by your lender and your financial background. Typically, a minimum down payment is of at least 20% or more of the loan amount. Documentation – You need to document your income and assets to prove your financial ability. You need to provide your tax returns, bank statements, and documents related to any other investments.
Besides these requirements, some lenders may expect a higher interest rate and may require a second appraisal of the home. So if you are shopping for a pricey home, you may consider looking for the jumbo loans in Utah and prepare yourself for the qualifying process.
Source: https://medium.com/@communitylendinggroup2727/why-get-utah-jumboloan-to-finance-expensive-properties-2fc3ff9ed33c