How to Refinance a Jumbo Loan
Home loans come in all shapes and sizes. The most common, of course, is the first mortgage---normally used to purchase a home. There are also second and third mortgages and home equity loans. Another is the jumbo loan. While individual states have different guidelines for jumbo loans, in general these loans are of greater value than traditional first mortgages.
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Things You'll Need
- Jumbo loan paperwork
- Income documents (W-2s, pay stubs)
- Homeowners insurance
Instructions
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Pull a copy of your credit report before you begin seeking lenders and programs. You can access a free copy of your credit report at Annual Credit Report. You should also pay for a copy of your FICO score. This is a three-digit number between 300 and 850. Scores over 720 are excellent; scores below 600 are poor.
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Determine the current value of your jumbo loan and look up your state guidelines (per the Federal Housing Administration) to find out if it truly qualifies as a "jumbo" loan. See the link in Resources to find state by state guidelines for jumbo loans. In general, if your mortgage is greater than $729,000, you will need to find a jumbo mortgage program.
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Research jumbo loan lenders in your local area. You will need to use your credit score as a guide, but you will also be unable to apply at some lenders. Local banks, for example, often will not make jumbo mortgages as they pose too great a risk. Your best bet will likely be mortgage brokers. These professionals usually have at least 100 lenders competing for your business.
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Review all jumbo loan offers side by side. Pay very close attention to the fees involved. Some brokers charge a percentage in origination fees based on the loan amount. Therefore, the greater the loan amount, the higher the fees. Also be sure you understand the interest rate---some brokers try to sell adjustable rates.
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Choose a lender and call your current lender for a payoff statement. This statement will include the total amount required to repay the loan in full, including all fees, back interest and prepayment penalties. Give this statement to your new lender.
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Review all the final paperwork before you close the loan. Jumbo mortgages are a huge risk to take in the first place, so you will need to be sure you understand and consent to all terms and conditions.
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Tips & Warnings
Try to get an exception with a lender if your loan limit is right on the cutoff line. Jumbo loans almost always come with higher rates and fees, and refinancing under a traditional program may save you money.
References
Resources
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