The Best Jumbo Loan Options

Jumbo loans are mortgages that as of 2006 in the contiguous United States are worth more than $417,000, a figure that is open to revision every few years. It's usually more challenging to get approved for such loans relative to less expensive ones. An excellent credit rating will not be enough to gain approval. It will also likely be necessary to have a low debt to income ratio (below 1/3rd) and an income sufficient to support the mortgage. In most cases, the lending institution will conduct extensive evaluation of your finances before considering you for approval for a jumbo loan.

Jumbo loans are mortgages that as of 2006 in the contiguous United States are worth more than $417,000, a figure that is open to revision every few years. It's usually more challenging to get approved for such loans relative to less expensive ones. An excellent credit rating will not be enough to gain approval. It will also likely be necessary to have a low debt to income ratio (below 1/3rd) and an income sufficient to support the mortgage. In most cases, the lending institution will conduct extensive evaluation of your finances before considering you for approval for a jumbo loan.

Pre-Application Process

Review your financial situation and order your credit report from each of the three major bureaus (Transunion, Equifax and Experian). Make copies of your financial information and prepare to present it to banks. If you have complex finances, you may wish to hire an accountant to assist you in the organization process. Jumbo loans pose a greater risk to lending institutions, so most will expect you to make a down payment on the property of at least 20 percent. Jumbo loans can't be sold to other lenders due to federal regulations, so the interest rates tend to be higher than those on smaller ones.

Applying for Jumbo Loans

Applying for jumbo loans is a more personalized process than that of applying for smaller mortgages. Banks don't standardize jumbo loan offers. Lenders alter jumbo loan agreements depending on the particular property and the financial situation of the borrower. Apply for mortgages from local lenders that handle jumbo mortgages. Some smaller institutions lack the financial resources to process jumbo loans. Compare the initial pre-approval offers that you receive from these various banks to determine which will be the most promising to pursue. A mortgage broker may be able to assist you in finding the best jumbo loan deal.

Finalizing the Loan

The bank that you work with will request that you provide detailed documentation of your finances and personal budget. Expect that you'll need to present copies of your income tax returns, pay stubs and other information relating to your financial situation. The lender will conduct extensive interviews with you (and your spouse if you have one) to ensure that you are capable of making the mortgage payments. Once you have established the lending relationship, the regulations concerning jumbo loans that prevent them from being sold to other lenders will ensure that you will have an ongoing relationship with the lender that is extending the initial loan.