Is a Jumbo ARM right for you?
Below are some key facts on Jumbo ARMs:
What is a Jumbo ARM?
Similar to any adjustable rate mortgage, Jumbo ARMs have interest rates that fluctuate after a pre-determined amount of time. 5/1 ARMs, for example, require borrowers to pay fixed interest rates for the first five years and then adjust on a yearly basis. The only difference between conventional ARMs and Jumbo ARMs is that Jumbo ARMs allow borrowers to exceed the conforming loan limit of $453,100 for a one-unit home set by Freddie Mac and Fannie Mae.
How can I benefit from a Jumbo ARM?
The main benefit is a low fixed interest rate during the introductory period of the loan. Jumbo ARMs make monthly payments more affordable for borrowers and therefore allow them to qualify for larger loan amounts.
Am I eligible for a Jumbo ARM?
Although Jumbo ARMs offer lower interest rates than conventional mortgages, they are generally more difficult to qualify for due to their size. Here are typical qualification guidelines:
- You must make a down payment of at least 20%.
- Your monthly mortgage payments should be less than 38% of your pre-tax income.
- You have a credit score of 680 or higher.
- You must be able to provide key financial documents such as proof of income, proof of liquid assets and proof of ownership of non-liquid assets.
Jumbo ARMs are not for everybody. When it comes to mortgages, it’s all about picking an option that fits your specific needs. To learn more about Jumbo ARMs or alternative mortgage options, reach out to us anytime 708-531-8388.