So, what exactly is the difference between a jumbo loan and a traditional mortgage loan? Simply put, a jumbo loan is a larger mortgage loan than a conventional mortgage loan, and a super jumbo loan has an even larger lent amount. If you’re looking to invest in real-estate with a large price tag, you’ll want to consider a jumbo or super jumbo loan. Let’s further investigate some of the differences you will encounter if you pursue a jumbo or super jumbo loan:
Different Interest Rates
Since a jumbo loan or super jumbo loan poses a greater risk for the lender of the loan, interest rates will be higher. Expect to see an interest rate that’s a few points higher than that of a conventional loan.
More Qualifications Required
Again, since jumbo and super jumbo loans are risky for lenders, certain qualifications need to be met. We’ve recently posted a blog on some of the qualifications you might expect, but you’ll need to speak with a lender directly to ensure that you do or do not qualify for these types of large loans.
More Money Up Front
Your initial down payment on your new property will likely be larger than a down payment expected on a conventional property investment. Again, to mitigate loan risk lenders are looking for investors to put down a substantial initial payment towards the property being attained.
The Best Jumbo Mortgage Rates Are Right Now!
All said, now is the time to invest in property, since jumbo mortgage rates are likely to rise in the near future. Financiers project that rates will rise sharply in September, 2015, if the Federal Reserve raises its rates (as they’re likely to do!).