Conventional loans limits are limits that are set by government sponsored lending services. The two primary financers of mortgages and home loans in the United States that set the conventional limits are Fannie Mae and Freddie Mac. Currently, conventional mortgages and home loans cannot exceed the amount of $417,000. Home loans that exceed the conventional limits are considered to be jumbo mortgages.
Jumbo Mortgages and Home Loans Risks
Jumbo mortgages present higher risks than conventional loans to both borrowers and lenders:
- Lender Risks: Jumbo mortgages and home loan lenders take on larger risks when providing financial backing for luxury homes. The niche market for homes above $417,000 is substantially lower than those within conventional loan limits. If a borrower defaults or has to move out of a home purchased with a jumbo loan, the lender may lose a lot of money if the home cannot be resold at its full price and a large sum of the loan still needs to be repaid by the borrower.
- Borrower Risks: The greatest risk for borrowers is equity. Because of the size of jumbo loans, building equity can take a while and even if equity is gained, the borrower may end up upside-down in a sale unless they possess a high equity percentage on the home. This is because of the smaller size of the luxury home niche market.
Bottom line, jumbo mortgages and home loans have higher interest rates and higher risks, but with the lowest rates we’ve ever seen, refinancing a jumbo loan can save you thousands of dollars in the long run.
Save Thousands with Inside Secrets
Who am I? I’m a guy that got scammed by an unethical mortgage broker and ended up paying thousands of dollars in unnecessary junk fees. After this happened, I made it my life’s mission to get back at the mortgage broker industry by exposing the secrets brokers use to extract extra money from homeowners. With the help of a friend with 27 years of experience as a broker, I’ve created a six-part video series that will take you through the refinancing process step-by-step. The videos will help you avoid tricks and scams and will help you save thousands of dollars in interest and hundreds of dollars per month guaranteed! Register for the FREE videos to learn how to refinance properly today!
Register for the six-part video series to learn how to get the best jumbo mortgage interest rates and save thousands in junk fees today!