Monday, November 11, 2013

Factors That Affect Jumbo Mortgage Rates

Jumbo mortgage rates are impacted by a variety of reasons. Banks will typically assess interest rate risk premiums for certain types of jumbo mortgage loans. As an example, an interest rate for a cash out mortgage loan will typically be higher than an interest rate charged for a mortgage obtained for purchasing a home. Below is a list of factors that will determine the interest rate that you will be charged on your jumbo mortgage loan:

Credit score: while a score of 740 will usually qualify for the best interest rates on conforming loans ($417,000) or less, some banks offer their lowest interest rates for borrowers with credit scores of 800 or higher

Loan to value: you typically need 20% down just to be approved for a jumbo mortgage loan; if you have equity/down payment of 40% or more, you will qualify for the lowest available interest rate

Loan type: purchase money mortgage loans (mortgages used to purchase new homes) have the lowest rates in today’s market

Property type: if you are planning on purchasing a condo, you will typically be charged higher rates than if you are purchasing a single family home

Occupancy type: jumbo mortgage rates are normally the lowest for primary residence mortgage loans; for jumbo mortgage loans, second homes carry a slight rate increase; many lenders do not even offer jumbo loans for investor purchases

Lock term: longer rate lock terms (i.e. 60 days, 90 days, 120 days) lead to higher interest rates

Escrows for taxes and insurance: normally, there is a slight rate increase (.125%) for a borrowers who want to pay taxes and insurance on their own

If you own or you are purchasing a home in Illinois, Indiana, Michigan, Minnesota or Wisconsin and you need a jumbo mortgage loan, please contact United Home Loans.


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