A Jumbo Florida Mortgage: Right For You?
Particularly in Florida, California, New England and other high-priced markets, you may hear a lot of advertisements for jumbo mortgages and wonder what that means.
Essentially, if a Florida mortgage exceeds a certain amount, it is considered a jumbo mortgage. As of this year, a jumbo loan is a mortgage of more than $417,000 (interestingly, in Hawaii, Alaska and the U.S. Virgin Islands, the limit is set at $625,000).
The jumbo limit typically changes each year, based on the home price appreciation around the country. Prior to this April, for example, the size limit was a much lower $357,650 — a telling sign of the real estate boom.
Normally, the approval process for a jumbo Florida mortgage loan is the same for conventional loans for most lenders. The interest rate for a jumbo mortgage is typically higher than a conventional loan, though. Usually, the difference is about 0.25 percent, which you can probably stomach if you’re in the market for such a gigantic mortgage in the first place, but which definitely makes a difference in terms of monthly payment size.
Now here is something to consider. A little known fact about mortgage brokers, or at least a little-used one, is that they are typically compensated based on the amount of the loan that closes. While this is obvious when you think about it, a lot of applicants fail to negotiate the rates they are being given. People haggle over just about all prices in America, but often will accept the rate they are quoted on a $500,000 loan without even inquiring.
A good Florida mortgage broker will be happy to discuss fees and open about what he/she stands to make from the transaction. That way, there are no surprises after the escrow stage and at closing time. If you are in the market for a Florida home loan of this size, definitely take the time to shop around for the best rates, and see if your broker (if you use one) is able to bring down the fee.
REMEMBER: They want you to get the loan, and to get it from them. Especially a jumbo mortgage, which is larger in size. If you go elsewhere, they get nothing. You may have more leverage than you think, so use it!
The first step is to review current the mortgage rates on the Internet and get a feel for the current market, keeping in mind that with jumbo loans, you’re looking at paying slightly higher interest. Then assess your loan needs and the amount you need, and proceed cautiously when contacting a mortgage broker if you don’t have a referral.
Once you’re quoted a rate, establish how long the lock is good for — one of the most common loan scams is for lenders to rescind rates previously guaranteed to you. Be sure you get it in writing that your rate is good for a certain number of days, and set the closing for within that time frame. Then use a mortgage calculator to make sure the high monthly payments are going to be doable.
Remember, there are taxes, insurance and other costs that inflate Florida mortgage payments. Your calculator will include only the mortgage itself, not any local taxes or maintanence costs. Factor these in to the monthly rate you’re quoted. Particularly with a jumbo mortgage, where you’re already over-extended, you don’t want to run the risk of default.
