Jumbo Loans Explained
Some people who decide to purchase homes want to buy in the luxury market. This means that larger home loans will be required since many luxury homes are well above the limits for conventional loans. Current conventional loan limits are in the $417,000 range. When a home-mortgage loan is needed that exceeds this range, the loan is referred to in the mortgage industry as a jumbo loan. Those who decide to take out jumbo loans should understand that the cost of luxury living includes higher interest rates. The reason for the higher interest rates on jumbo loans is because of the higher risk of purchasers defaulting on the loans. Expensive luxury homes can be more difficult to sell in almost any housing market so higher interest rates on jumbo home loans offer lenders some protection. Jumbo mortgage limits are different depending on where the loan is sought. A lender can provide specific information regarding jumbo loan limits.