Why Look Into a Jumbo Mortgage?
Jumbo mortgages may seem rather risky to some people. After all, applying for a loan amount that is well above the average mortgage standards would probably pose a more complicated set of problems as the current property market may not exactly be at its best. However, many consumers are taking advantage of the 30 years fixed jumbo mortgage especially when they are planning to stay in the home they are buying for a long time. Many new consumers who are buying their first home may prefer to select a home that is not only comfortable and affordable but also reflects their status as young professionals. As this particular type of home loan allows borrowers to purchase a home with a higher price than the conventional mortgage limit set by Fannie Mae and Freddie Mac, many of them may actually prefer it.
Due to the economic downturn and low housing market prices many young consumers may also find it quite difficult to find a lender who would be willing to approve their application for a 30 year fixed jumbo mortgage. Generally, Fannie Mae and Freddie Mac may cap the loan limit at $417,000 depending on the state. A dollar figure that is more than that may generally be funded by other investors or banks. Many lenders who offered jumbo mortgages probably no longer offer these loans to consumers due to the fact that they may have to fund the loans themselves. Some lenders who specialized in jumbo mortgages might even have gone out of business. However, in some states, it may be quite difficult to buy a home without applying for a jumbo mortgage.
It may be a trend where young professionals with considerably large salary prefer to purchase expensive homes to portray the chic urban lifestyle they are living. This may be because many of them can actually afford the higher 30-year mortgage rate of their jumbo loans but may not have enough funds for a large down payment. Young professionals generally may not have enough saved up for a substantial down payment as many of them may have only started working for less than a year but their high paying jobs allow them to purchase an above average home. They may prefer the jumbo mortgage because they may not be required to put down a large sum in down payment but they can still afford the monthly commitment. They may have to spend less if they were to rent a place but many young consumers now find home ownership to be a better option than renting.
Young home buyers who can afford a 30-year mortgage generally apply for jumbo loans to create a significant rise on their credit score. Basically, if they are making hundreds of thousands a year they probably can afford the high monthly payment they would have to make on the purchase of their expensive homes. Many make a point to pay their dues on time so that their credit score would increase dramatically. When their credit scores increase they may have better chances of getting other loan options for their other big purchases such as auto loans and credit cards. Of course, there may also be home buyers on jumbo loans who neglect to pay their dues on time. They may have to remember that defaulting on their monthly payments may cause their credit scores to decrease as quickly and dramatically.
Generally, young consumers love jumbo loans because of the options and flexibility they get when it comes to choosing their dream home. Even if they cannot make a huge down payment they could still buy more expensive homes with jumbo loans. Their income enables them to be able to afford more luxurious homes and at the same time maintain their image as young professionals who are on the rise.