Jumbo Mortgages May Carry High Interest
Jumbo mortgages are designed to be nonconforming. When secured through either Fannie or Freddie Mac, the amount limits are set by Congress. These loans will come with a lot of requirements and quite a few restrictions including a high-interest rate. Additionally, you’ll definitely need to have a least a five percent down payment to secure these loans.
Higher Risks Means Higher Rates
When using a jumbo mortgage as a refinance loan, expect to pay a higher interest along with several fees paid up front because of not only the amount of the loan, but also due to the higher risk the lender assumes making such a loan. They are not typical finance or refinance products and are not as profitable to the lender as are conventional loan products. Therefore, many consumers seeking either a new mortgage or possible refinance probably to not encounter mention of a jumbo mortgage in any preliminary discussions about qualifying for a loan.