Super jumbo mortgages are loans that exceed conventional and jumbo loan limits as put forth by Fannie Mae and Freddie Mac. Fannie Mae and Freddie Mac finance the majority of loans in the real estate industry and have set the conventional loan limit at $417,000. Jumbo loans are any loans that exceed this amount and super jumbo loans usually exceed the amount of $650,000.
There is no set standard for what defines a super jumbo loan and lenders often define the amounts differently. Like jumbo mortgages, super jumbo mortgages possess higher interest rates because they are high risk because fewer homeowners are looking to buy a house that requires a Super Jumbo mortgage. Super jumbo loans are often used to pay for homes exceeding a million dollars. In the event that the home needs to be resold, very few investors are available to pick up the home, which creates high risk and potential for financial loss.
Super Jumbo Mortgage Refinancing Qualifications and Lenders
Refinancing super jumbo mortgages can be trickier than refinancing a conventional loan because most major lenders will not finance mortgages over a million dollars unless the LTV (loan to value) ratio is very small. Lenders like Fannie Mae and Freddie Mac might finance a portion of a super jumbo loan, but borrowers usually end up having to seek out private mortgage finance specialists to cover the remaining expenses. Because of this, qualifying for a super jumbo loan can be difficult because a borrower needs to adhere to the standards of federal and private mortgage finance institutions.
Reasons to Refinance a Super Jumbo Mortgage
Super jumbo mortgage refinancing may benefit a borrower if they are able to get lower fixed interest rates than what they currently have. If the homeowner is planning on staying in their home for a while, the benefits may outweigh the costs, saving them thousands of dollars in interest in the long run.
Many super jumbo loan borrowers may refinance to a jumbo or conventional loan once their loan size is within the limits stipulated Fannie Mae and Freddie Mac resulting in thousands of dollars saved.
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