Home – Jumbo Loans
When the home of your dreams is in an extremely desirable higher priced real estate market, or your growing family demands a larger home, a Jumbo loan may be right for you.
Jumbo loans are also considered non-conforming loans because they exceed the conforming loan limit of $417,000. Some counties may vary in conforming loan limits, so our experienced advisors will help you decide if your loan amount fits into the limits, or if a Jumbo loan is the right option for you.
Interest rates on Jumbo loans tend to be higher, due to the increased risk associated with larger loan amounts, and because the loans cannot be sold to Freddie Mac or Fannie Mae on the secondary market. Some borrowers may choose to pay a larger down payment to get their loan size below the conforming limit. Other borrowers are comfortable paying a higher monthly payment instead of putting the additional money down. For these borrowers with higher monthly income but less available savings, a Jumbo loan is the perfect solution.
What You Need to Know
- Jumbo loans are available in a variety of fixed and adjustable rate terms
- Tend to have higher down payment and cash reserve requirements
- For loans above the conforming loan limit up to $5 million
The exclusive community, the premium county, or the upgraded house to fit your growing family is all hallmarks of a Jumbo loan.
Our loan advisors at American Pacific Mortgage can help you determine if your loan amount falls outside of the conforming limits. While piggyback second mortgages and larger down payments could bring your loan amount down to conforming limits, you may choose to utilize a Jumbo loan instead. We will help you understand your options so you can decide which loan will best fit your needs.
An interest only loan allows you to pay only the full monthly interest due on your loan for the fixed period of the loan, which can range from 5 to 10 years. During the fixed payment period, you’re required to make only the interest payments; the principal remains unchanged. When the fixed period expires, you begin paying on the principal, too, resulting in an increased mortgage payment.
One unique characteristic of an interest-only loan is that you may elect to make either the minimum monthly payment (the interest-only portion), or, at your discretion, additional payments to be applied to principal to reduce the principal balance. Doing so will reduce your minimum monthly payment in the following month, because the minimum payment will be recalculated based on the remaining loan principal.
This unique tool is very attractive to borrowers whose income ebbs and flows, as it maximizes cash flow between commissions or bonuses. When income periods are lower, only the interest payment is due. In those periods that your income surges, you can make additional payments towards your principal and lower your future IO payments.
How Low Can You Go?
- Borrowers with short-term home plans who would rather increase monthly cash flow than build equity
- Buyers with the intent to remodel or repair a home and then quickly sell it Investors who want to free up cash flow for other investments
- Borrowers confident that their monthly income will increase
- Buyers with inconsistent monthly income
Most lenders will allow you to pay down the principal amount of your loan during the IO period without penalty, but some lenders may have limits on the amount of principal you can pay down during this initial period. Our loan experts at American Pacific Mortgage can help you choose the IO loan program that will best align with your principal payment plans.
An Interest Only loan is a unique program that will offer spectacular benefits to the right borrower, but it may not be right for everyone. If paying your house off quickly is your top priority, the IO loan is not for you. Let us help you select the home loan that is perfect for your individual home goals.