Probably you have already heard the term Jumbo mortgage loans. What is it and what makes it different from simple mortgage?
The definition in wikipedia is as follows:
Jumbo mortgage is a mortgage with a loan amount above the industry-standard definition of conventional conforming loan limits. This standard is set by the two largest secondary market lenders, Fannie Mae and Freddie Mac. Loans above the conforming limits may be offered by seller servicers of these wholesale institutions, as well as Wall Street conduits who provide warehouse financing for mortgage lenders.
Jumbo loan limits exceed the maximum loan limits set by the government-sponsored entities Federal National Mortgage Association (FNMA) and the Federal Home Loan Mortgage Corporation (FHLMC).
The interest rate charged on jumbo mortgage loans is generally higher than a loan that is conforming, due to the slightly higher risk to the lender.
Jumbo mortgage loans are large and jumbo lenders often offer variable loan programs to the jumbo client. Jumbo mortgage loans are a higher risk for lenders. If jumbo mortgage loan defaults, it will be more difficult to sell a luxury residence quickly for full price. That is one reason lenders prefer to have a higher down payment from jumbo loan seekers.
Some consumers seeking a jumbo mortgage choose to seek advice from a competent professional familiar with jumbo mortgage loans.
