Jumbo loans and conforming loans are quite similar when it comes to the factors affecting mortgage rates. So, don’t be surprised if the items listed here are also similar to conforming loans’. If in case you are going to apply for a jumbo loan, consider these factors before you even call the first lender you have in your list of prospects.
But first things first, what are jumbo loans? In simplest terms, these are massive loans. Any mortgage loans that are bigger than the conforming loan limit of USD 484,350 are considered a jumbo loan. Because these loans are big, even small decreases in jumbo mortgage rates, Tampa, FL, can translate into a serious amount of savings for borrowers. Thus, you must know the factors affecting such a rate.
Credit scores allow lenders to determine your financial health. A bad credit score can have a drastic effect on jumbo mortgage rates. You pay higher rates instead of saving on your mortgage. So, work to achieve a healthier credit score.
Lenders may require your FICO score to be higher than 700, and sometimes as high as 720, to qualify for a jumbo loan. But aim to get a 760 score or higher to have better chances of getting the best interest rates available.
Remember, your lender will investigate your credit history; they would know your financial background. One course of action you can take is to pay down – or pay off – small revolving debt before running your credit application. This can help in boosting your FICO.
Loan-to-value ratio (LTV)
Most traditional mortgages require insurance when the loan-to-value (LTV) is greater than 80%. You can qualify for lower jumbo mortgage rates when LTV is less than 80%. The lower the LTV, the lower the risk the loan is.
While low down payments are fairly common on conforming loans, jumbo loans are more likely to require a down payment of at least 20%, though some lenders may go as low as 10%. The higher the downpayment, the better the chances to get a more favorable rate.
Want to learn more about the factors affecting jumbo mortgage rates, Tampa, FL? Contact HomePlus Mortgage today at 800-810-PLUS (7587).