What is a Jumbo mortgage?
Any mortgage which is above half a million is a jumbo mortgage. You can call it jumbo loan too. This mortgage is for those who have a huge monthly or yearly earnings. They can afford to pay high monthly instalments. Jumbo loans have a slighter high rate of interest than conventional loans. Because big loans have big risks for lenders. Also, These loans need guarantor or collateral as security. This loan is for those individuals who have a good payback capacity of loans.
Who qualifies for Jumbo Mortgages?
As a result, This mortgage is the most suitable for those who have a yearly earning of £250, 000 to £500,000. These individuals come in the category of those mortgage holders, who earn a lot but they are not very rich yet. People those want to qualify for such jumbo loans should have good or excellent FICO scores. Similarly, a person who has financial stability, qualify for this. Those who have been regular taxpayers. Also, who had been holding huge accounts in banks are the qualifiers of Jumbo loans.
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Implications of Jumbo Mortgages:
First of all, We all should know about the implications of all kind of loans. While Jumbo loan is one of the biggest liabilities ever for an individual. Most noteworthy, this mortgage does not give a tax relaxation on the entire loan amount. whereas it covers only a limited amount of total loan. Apparently, a borrower of the loan pays tax even after he holds a big mortgage. Addition to that, if someone starts skipping repayments on this loans, it increases the liability rapidly. Because it has a huge loan amount. Due to a high stake of risk, the rate of interest is always higher on these loans.
How to begin with Jumbo mortgages?
A borrower who plans for a Jumbo loan can expect a loan of more than half a million. Whatever asset he plans to acquire with a jumbo mortgage, he has to have at least 30-40% of its total cost with him. Hence, a down payment of around more than a quarter cost gets done by the applicant itself. As a result, he has to have a good source of income to qualify for the loan. In fact, an applicant can join the loan with a co-applicant too. So, the co-borrower shares the loan responsibility. Also, one can qualify for more loan amount.
Thus, A jumbo mortgage is a big loan. And people with good credit history may qualify for it.
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