 |
|
|
|
A jumbo mortgage, also referred to as a non-conforming mortgage, is any mortgage whose amount exceeds limits that are set annually by Fannie Mae and Freddie Mac. Currently, as of 2006, these limits are:
Please note: 1- to 4-family mortgages in Alaska, Hawaii, Guam, and the U.S. Virgin Islands are 50%t higher than the limits for the rest of the U.S.
Jumbo mortgages typically have interest rates that are higher than conforming mortgage interest rates. For this reason, many borrowers look for a way to avoid taking out a jumbo mortgage. There are two basic strategies to accomplish this:
Example of Using a Piggyback Loan to Avoid a Jumbo Mortgage
An example will go a long way to helping borrowers understand this strategy. For this example assume that the borrower is purchasing a home for $562,500 and that they have a 20% down payment. If they were simply to take out a loan to cover the remaining balance they would take out a $450,000 jumbo loan (see figure 1 below).
| Purchase Price: | $562,500 |
| Down Payment: | $112,500 |
| Loan Needed: | $450,000 |
Using this scenario, if the borrower wanted to avoid taking out a jumbo mortgage they would need to take out a second mortgage to get the amount needed for the primary mortgage down to $417,000. In this instance they would need a second mortgage of $33,000 on top of a primary mortgage of $417,000 (see figure 2 below).
| Purchase Price: | $562,500 |
| Down Payment: | $112,500 |
| Amount to be Financed: | $450,000 |
| Primary Mortgage: | $417,000 |
| Second Mortgage: | $33,000 |
| Total Financed: | $450,000 |
In most cases, the interest on the lower interest for the conforming mortgage will be significantly less than the interest that would have been paid on the jumbo mortgage even after the interest cost of the second mortgage is taken into account.
It should be noted that Fannie Mae and Freddie Mac also have loan limits for second mortgages. As of 2006 these limits are:
Get multiple quotes. Choose the best rate. No obligation.
Common Mortgage Types
• Adjustable Rate Mortgage
• Fixed Rate Mortgage
• Understanding Arm Indexes
Government Mortgages
• FHA Loans
• HCFP Loans
• VA Loans
• State Housing Financing
Home Equity Loans
• Home Equity Line Of Credit
• Obtaining Equity From Your Home
• Reverse Annuity Mortgage
• Second Mortgages
More Resources
• Mortgage And Lender FAQ
• Mortgage Information Search
Mortgage Process
• Avoiding A Jumbo Mortgage
• Avoiding Private Mortgage Insurance
• Dealing With Credit Issues
• Glossary Of Mortgage Terms
• Mortgage Application Process
• Mortgage Laws And Regulations To Protect The Consumer
• Shopping For A Mortgage
• Understanding Credit
New Home Mortgage
• How Much House You Can Afford
• How Much Should You Put Down On A Home
• Mortgage Pre Qualification And Pre Approval
• Mortgages For Purchasing A Home
Refinancing A Home
• Refinancing Your Home
Related Products And Services
• Mortgage Life Insurance
• Private Mortgage Insurance
• Title Insurance
Specialty Mortgages
• Alt A Mortgages
• Balloon Mortgage
• Bridge Loan
• Construction Loan
• Eighty Twenty Mortgages
• Graduated Payment Mortgage
• Growing Equity Mortgage
• Interest Only Mortgage
• Low Doc No Doc Mortgages
• Subprime Loan
AL
AK
AZ
AR
CA
CO
CT
DE
DC
FL
GA
HI
ID
IL
IN
IA
KS
KY
LA
ME
MD
MA
MI
MN
MS
MO
MT
NE
NV
NH
NJ
NM
NY
NC
ND
OH
OK
OR
PA
RI
SC
SD
TN
TX
UT
VT
VA
WA
WV
WI
WY
Assurity Financial Services LLC
Financial Freedom Senior Funding Corp
First Horizon Home Loan Corporation
Pinnacle Financial Corporation
Copyright © 2004-2009. All Rights Reserved. Moving Traffic, Inc., operator of CityTownInfo.com, is not a broker or a lender, and all offers for loans or mortgages found on this site are made solely by the advertiser.