Arizona Jumbo Mortgage Financing
Arizona Jumbo Mortgage Loans (or Jumbo Loan) are a specific type of non-conforming loan. If you’ve read our “Conventional Loan” information, you’re already a little familiar with this. If not, here’s a quick catch-up:
Fannie Mae and Freddie Mac, the two government-sponsored enterprises, have specific requirements in place that determines if they can purchase a loan from a bank or lender. One of those requirements is the maximum value of a particular loan. If that specific requirement is not met, that home loan is considered a “non-conforming” loan and is classified as a Jumbo Loan.
Are Arizona Jumbo Mortgage Loans a bad thing? No, not at all! However, mortgage bankers and lenders consider jumbo’s to be a riskier loan to make. There is a big difference between having one $3 Million loan versus having ten $300,000 loans. It comes down to “putting your eggs in one basket”…there’s always more risk in doing that.
Therefore, qualifying for an Arizona Jumbo Mortgage or Loan is a bit more complicated. Let’s take a look at some important points to consider when looking into receiving a Jumbo Mortgage or Loan.
- First, timing can be a significant factor. The jumbo mortgage financing industry, like many others, is always in a state of flux with supply and demand for these types of loan products changing regularly due to outside market conditions.
- Second, be prepared to see a higher rate on your loan. Remember, these are “non-conforming” loans that have more risk associated with them. Financing a larger property that might be difficult to sell off means the lender is taking more risk. You pay for that risk with a higher rate.
- Third, down payments for Arizona Jumbo Loans or Mortgages are required to be 20% or more of the purchase price. Private Mortgage Insurance, or PMI, is not available for Jumbo Loans at this time so you must have at least a 20% down payment.
- Finally, a good rule of thumb to remember when trying to qualify for a non-conforming loan such as this is to have your paperwork and documentation well organized. You will be required to explain more things in more detail, so be prepared for anything that may bring up potential questions about your ability to repay the loan.
Here are some examples:
You will need to thoroughly discuss your business or employment situation. Jumbo Loans and Mortgages come with a sizable monthly payment, and you need to prove that you will have an ongoing ability to make those payments!
Some underwriters will even do some “extra” digging on Google…so it’s best that you’re aware of what they might find in advance and have explanations.
Documentation of your assets will be critical, and they will have to make sense in relation to your income. If you’re stating a $50,000/month income, there should be assets and investments to support that. You’ll also want to make sure you have a strong paper trail of large expenditures or deductions from your checking accounts.
In addition to having a high credit score and proof of a responsible borrowing history, underwriters will often look for other sizable debts and if the borrower has had a positive experience managing or paying off.
Multiple Property appraisals may be required so don’t be surprised. The overall landscape of appraisals required for Arizona Jumbo Mortgages has changed a lot over the last few years. To assure additional accuracy and reduce the risk for this type of loan, it is not unusual for a lender to ask for appraisal from multiple sources.
Finally, the overall profile and documentation of a borrow has to make sense. A borrower’s lifestyle, assets, credit history and income potential need to follow a similar pattern to others. If it doesn’t make sense, the challenges will increase!
