Cost Of A Jumbo Mortgage Loan
Mortgage lenders set the price of borrowing money with a home loan (the rate at which the mortgage is repaid over time and the fees charged initially) by the risk level of the investment. The more likely they believe the mortgage holder is to make their payments each month for the life of the loan, the lower the cost, and vice versa. The risk level is determined by a complex formula based on the data of how previous mortgages performed. Because there is more money involved jumbo mortgages inherently carry greater risk, and will be priced somewhat higher than their conforming counterparts.
You can keep the cost as low as possible by showing reduced risk to the lender in other areas such as borrowing a smaller portion of the value of the home with by coming up with a large down payment in a purchase, or limiting the loan amount on a refinance. An excellent credit score, and high income relative to your overall debt will also work in your favor and lower the cost of a jumbo loan.
Types of Jumbo Mortgages
Just because you are taking out a larger loan does not mean you are limited to only a 30 year fixed rate mortgage program. There is a wide variety of jumbo loan options including:
- 3 Year Jumbo ARM (Adjustable Rate Mortgage)
- 5 Year Jumbo ARM
- 7 Year Jumbo ARM
- 10 Year Jumbo ARM
- 15 Year Fixed Rate Jumbo Mortgage
How to Apply For A Jumbo Loan
The process of applying for a jumbo loan is the same as applying for a mortgage of a lower amount, though there may be increased requirements due to the larger loan amount. Your mortgage lender will collect information to present to the underwriter who will approve or deny the loan, or ask for additional information. This will include information on your financial past, present, and future such as your credit history, current assets and liabilities, and your income. It will also include data on the property such as an appraisal giving an estimation of the home’s value, and a title search to be sure there are no outstanding undisclosed liens on the real estate.
Article Source: http://EzineArticles.com/?expert=Anna_Platz .
Now let us try and understand what is a second mortgage loan and what are the conditions in which the lender will sanction it. Second mortgage is, like the name suggests, a loan taken where the asset/property is mortgaged for the second time. Simply, it is a second loan taken on the mortgaged property. It is also a secondary mortgage in the sense that, in case there is a default on the loan, the property will be sold and the proceeds will be used to pay off the first loan. The remaining proceeds from the foreclosure, if any, will be used to pay off the second mortgage. So the second mortgage lender runs a risk that he may not recover the money he lent. So as this is a risky proposition for the lender, a second mortgage rate is understandably higher.
But how does a second mortgage work. A second mortgage has its share of restrictions. For instance, you don’t get to decide the amount you will get for your second mortgage. The amount of a second mortgage is decided by the built up equity. The built up equity on a property may be defined as the difference between the market value of your home and the amount of mortgage payments due. Hence, if your property is worth $100,000 and your outstanding mortgage payments are $65,000 then you will receive an amount of $35,000 for your second mortgage. Sometimes, although very rarely, there is a chance that the lenders will allow your total debt to go up to 125% of your property value. In this case, you can obtain an amount of $60,000 on your second mortgage. But the chances of that are very rare in the present circumstances and requires an excellent credit history. But second mortgage rates of interest are very high and it is a risky proposition overall for both you and the lender.
Advantages of a Second Mortgage Read the rest of this entry »
The term mortgage basically means the transfer of interest or property to the lender of the mortgage loan. The next question that one might ask is what is a mortgage loan? The answer is extremely simple. A mortgage loan is a home loan, where the property or real estate that has been purchased is pledged as a collateral with the lender. The lender of the loan is legally empowered to sell off the property to recover his losses in case of a default. The mortgage, in legal language, is often termed as a ‘transfer of interest of property’ or ‘transfer of rights to property’. The mortgage loan is often also used as a financial aid to purchase commercial property and real estate. In short, the mortgage loans have a higher scope than home loans. The installments that are to be paid to the mortgage lender are commonly termed as mortgage payments.
How to Calculate Mortgage Payments?
The methods that are used in calculating mortgage payments are often very complicated and to some extent hard to comprehend. On the other hand, it is much more easier to calculate the mortgage payments with a set of much simpler formulas. Here’s what you can do…
Step 1: The first thing that we should know, is what are the constituents of one single installment. One installment is the sum total of a portion of amount of interest and a portion of principal amount that you need to repay. You will also need to assemble three elements, namely the principal amount that you borrowed, the time period for which you borrowed the mortgage loan, and finally the rate of interest in percentage. With this done, you can start off the calculation. Read the rest of this entry »
The remortgage is a loan that is similar to the mortgage loan. The only difference is that the remortgage loan is used to pay off the original mortgage and the borrower then repays the remortgage loan. The remortgage is basically a type of loan that is used to avoid foreclosure. In the European countries like Britain the term remortgage is commonly used and the term refinancing is used in the United States of America.
Many people commit the common mistake of terming a loan modification or second mortgage as a ‘remortgage’. The remortgage, however is a process of switching from one lender to another lender. This is done when the original lender refuses to consider a loan modification agreement. Hence, legally, the borrower can approach another lender, who is ready to sanction a lower rate of interest and more favorable installments. The new lenders helps the borrower to pay off the initial mortgage and recover the rights to the property. Then the borrower has to pledge the property to the new lender. Like common mortgages, remortgage loans are also given to people who have a considerably good rate of credit, average credit score and clean credit history.
Adverse Credit Remortgage Read the rest of this entry »
This is the first time that I write an article about reverse mortgages.In fact,many people are not familar with this kind of loan.So I just want to do some writing about it and make you know something about it.
First,the Reverse Mortgage is a national program which is offered to senior homeowners 62 years and older which allows for you to access your home equity without a monthly mortgage payment.So it is not access to you if you are very young.And this is one of the reason that it is not known to many people.
Second,it doesn’t require a monthly mortgage payment. This is very unique comparing with other kinds of loans.In my view,it is designed to meet the need of the old people because they are not as energetic as the youngs.
Third,there are no income or credit score requirements.We all know that the credit score is very important for the borrowers.You may wonder why it is regardless of the credit score.According to my experience,it is because it is very cruel if the olds do not have a house to live in.So it is not as strict as the other loans.
After so much explanation,you may ask me where we can get the reverse mortages.In fact ,there are many agents providing the services now.You can search for some agents from Google.I will give you an example here.That is allrmc.com.The reason that I strongly recommend it to you is that it is an agent professional in reverse mortgages .Other than providing various reverse mortgage information,it also owns a reverse mortgage calculator which is very useful.
Ok,that is all.If you have more questions,please consult allrmc.com or leave a comment on my blog!