Jumbo Home Loans in Illinois
What Happens If You Need a Jumbo Loan in Illinois?
In most cases, the price of the home you are planning to purchase will dictate the amount of money you need to borrow to help you pay for it. The higher the home’s price, the larger the mortgage you will need. Keep in mind, however, that loans that exceed certain limits are generally called “jumbo mortgages” and may carry higher interest rates and require you to meet additional requirements before you qualify for the loan.
In the early 2000s, mortgage lenders in Illinois and around the country relaxed their lending requirements and jumbo loans were easily available with down payments of 5% or less. But the 2008 financial crisis ended that. While jumbo loans in Illinois were difficult to find immediately after the crisis, today an increasing number of lenders are offering them but have generally imposed stricter requirements to qualify.
Conforming Loan Limits
A jumbo mortgage is a loan that exceeds the conforming loan limits that have been set by the Office of Federal Housing Enterprise Oversight. That means that the loan isn’t eligible to be purchased or guaranteed by either Fannie Mae or Freddie Mac.
As of 2012, conforming loan amounts are generally $417,000 except in Alaska, Hawaii, Guam and the U.S. Virgin Islands, where the limit is $625,500. That’s also the limit that applies in certain high cost areas around the country which vary county-by-county in certain states. For example, the higher limits apply in New York City and its nearby suburbs, in much of California and in the suburbs around Washington D.C. (but not in the District itself). However, the lower $417,000 limit applies in such high cost places as South Florida and in cities such as Chicago, New Orleans, Dallas and Atlanta.
The Consequences of Higher Risk
Because banks can’t sell these loans to Fannie Mae or Freddie Mac, they must hold on to them themselves. Because these loans are typically secured by luxury homes that are more difficult to sell, they represent a higher risk to the lender. To compensate for that risk, jumbo mortgages in Illinois sometimes require:
-A higher interest rate (anywhere between ¼ and ½ a percentage point higher).
-A higher down payment. At least 20% is recommended. Loans above $1.5 million will typically require even higher down payments.
-Two appraisals, because the value of higher priced homes is more subjective.
-Higher closing costs.
-The need to document your income when you apply for the loan.
In addition, the borrower may need to accept an adjustable rate loan because fixed-rate jumbo loans are more difficult to find.
Illinois Jumbo Loans with United Home Loans
Especially today, all jumbo loans are not created equal. They vary in terms of interest rate, type of loan and required down payment. If you need a jumbo loan to purchase a home in Illinois, why not contact United Home Loans and discuss lender what we believe to be the most favorable terms? Doing so will probably save you money and get you a jumbo loan that truly meets your needs in a home loan.
To learn more about Jumbo Loans in Illinois and getting pre-approved to buy your own home, please visit our free "Get A Quote" page to fill out a quick loan application or call us at 708-531-8388.