Five Things Wisconsin Borrowers Should Know about Jumbo Mortgage Loans
Jumbo loans have become a more popular topic in recent years as the market for homes in metro-Milwaukee – high-end properties included – remains competitive. Jumbo loan financing is specialized, and because of this, some mystery and confusion surrounds the topic. At Great Midwest Bank, we offer jumbo home mortgage loans for those in the market to purchase or refinance qualified homes. There are a few factors that differentiate jumbo loans from standard home mortgage lending products, and we’re here to clear up any questions both new and experienced borrowers may have about jumbo loans. Contact our experienced loan officers to discuss any additional questions.
Here are five things Wisconsin borrowers should know about jumbo home mortgage loans:
1. What makes a jumbo mortgage loan?
The current “conforming” loan limit for a single-family (primary or second) home in Wisconsin is $484,350. For loans that exceed that amount, a jumbo mortgage is often necessary. Like other mortgages, jumbo loans come in the form of both adjustable and fixed rates, which are often slightly higher than their conforming counterpart. When a borrower needs slightly more than the limit, a “piggy-back” option might make sense, where the bank provides a smaller second loan to make up the difference.
2. How is the jumbo mortgage loan process different?
The market for high-end homes can be inherently riskier due to swings in value, requiring more conservative underwriting. Local lenders like Great Midwest Bank take pride in understanding specific sub-markets throughout the area, and because we know our own backyard so well, our underwriting process is often far less cumbersome.
3. Are the interest rates and costs for a jumbo mortgage loan higher?
In recent years, the market for fixed rate jumbo loans has become more competitive. The key is that the fixed rate jumbo loans must fit neatly into a uniform group of other similar borrowers. While rates and fees for these types of loans have dropped to something similar to the smaller, conforming loan market, requirements can be restrictive. A Great Midwest Bank portfolio loan can be a nice alternative.
4. Can I use a jumbo mortgage loan for new construction or a major home renovation?
Absolutely – both new construction and major home renovations are very popular uses of jumbo loans using a Great Midwest Bank portfolio loan. Our jumbo mortgages can help bridge the gap as you remain in your current home during construction of a new home, and it’s been a vehicle to combine an existing loan with financing for a major remodeling project as well.
5. Does a jumbo mortgage loan require a larger down payment?
Not necessarily. At Great Midwest Bank, we historically have offered only our portfolio jumbo loan product with an adjustable rate. It’s a popular option because of the flexibility of our local underwriting requirements, and in some circumstances, a lower down payment via private mortgage insurance. In addition, after closing, our portfolio loans of all sizes are serviced right here in Wisconsin.
It’s a safe bet that the larger, national programs for fixed rate jumbo loans (one of which is now offered by Great Midwest Bank) generally require a larger down payment. The product provides the security of a longer term fixed rate but requires stronger credit and income history. Contact one of our expert loan officers for more information.