A jumbo mortgage is a mortgage that exceeds the loan amount limits set by the FHFA (Fannie Mae & Freddie Mac). On average, a jumbo loan in California is any mortgage loan that exceeds $726,200.
However, in certain high-cost areas in California, higher jumbo loan limits exist as a result of the higher cost of living and some of these high-cost areas have jumbo loan limits that start at $1,089,300. If you need a loan that exceeds the limit set for your area, you’ll need to apply for a jumbo loan, which may result in higher interest rates and stricter requirements/guidelines to qualify.
- Only a 3.5% down payment is required for loan amounts up to $1,500,000 when buying a primary home. A 10% down payment is required when purchasing a second home.
- No PMI requirements allow borrowers to save thousands of dollars over the life of their loan. Private Mortgage Insurance is required on all FHA and conventional loans that are over 80% loan to value.
- Debt to income ratios for jumbo loans can be up to 45%. A borrower’s debt to Income ratio is a comparison of money earned vs money owed.
- Down payment requirements for jumbo loan financing are nearly identical to that of conventional loans. For example, borrowers do not need a 20% down payment in order to buy a $2,000,000 home. When buying a luxury primary home, borrowers can put down as little as 10%.
- Jumbo loan terms are available as 15-30 year fixed rate loans or 5, 7 or 10 year ARM (Adjustable Rate Mortgage) loans.
If you’re looking to buy a home in a high-price market, most likely you’ll need a jumbo loan. The good news is, that these loans are much easier to obtain now than they were just a few years ago. We can close a jumbo loan in just 21 days! Unlike other lenders, we underwrite jumbo loans in-house which allows for a quicker and more seamless funding process.
Despite having slightly higher interest rates and stricter qualifying requirements, jumbo loans are still very competitive.
Property Types
You can use a jumbo loan to purchase a primary home, a second home or an investment property. Condos, single-family homes and multi-family properties (2-4 units) are all eligible for jumbo loan financing.
Credit Score
Given that qualifying requirements are tougher for jumbo loan financing, credit scores typically need to be at least 680 or above. However, applicants with lower credit scores can still obtain jumbo financing but a higher down payment (more than 30%) may be required.
Refinancing a jumbo loan in Cerritos, California, can be a strategic financial move, especially if you’re aiming to lower your interest rate, adjust your loan term, or tap into your home’s equity. Given the unique nature of jumbo loans—mortgages that exceed the conforming loan limits set by the Federal Housing Finance Agency (FHFA)—it’s essential to understand the specific requirements and steps involved in the refinancing process in California.
When Should You Consider Refinancing?
Refinancing a jumbo loan might be beneficial under the following circumstances:
- Interest Rates Have Dropped: If current jumbo loan rates are significantly lower than when you secured your original loan, refinancing can lead to substantial savings over the loan’s life.
- Improved Credit Score: An enhanced credit profile can qualify you for better mortgage rates, making refinancing advantageous .
- Switching Loan Types: Transitioning from an adjustable-rate mortgage (ARM) to a fixed-rate loan can provide payment stability.
- Accessing Home Equity: If your home’s value has appreciated, a cash-out refinance allows you to utilize the equity for other financial needs.
Requirements for Refinancing a Jumbo Loan
Refinancing a jumbo loan involves stricter criteria compared to conforming loans:
- Credit Score: Lenders typically require a minimum credit score ranging from 680 to 740, depending on the loan type .
- Debt-to-Income Ratio (DTI): A DTI of no more than 45% is generally expected .
- Cash Reserves: Lenders may require you to have reserves covering 6 to 12 months of mortgage payments .
- Documentation: Comprehensive financial documentation, including tax returns, pay stubs, and bank statements, is necessary.
Steps to Refinance Your Jumbo Loan in Cerritos
- Evaluate Your Financial Goals: Determine your objectives, such as reducing monthly payments, securing a lower interest rate, or accessing equity.
- Check Your Credit Score: Ensure your credit score meets the lender’s requirements.
- Compare Lenders and Rates: Shop around to find the best refinancing terms.
- Gather Necessary Documentation: Prepare all required financial documents.
Refinance or apply for a mortgage online
- Appraisal and Underwriting: The lender will assess your home’s value and review your financials.
- Quicken Loans
- Closing: Finalize the refinance by signing the necessary documents and paying any closing costs.
Local Lenders in Cerritos
Several lenders specialize in jumbo loan refinancing in the Cerritos area:
- The Lending Mamba: Offers personalized jumbo loan solutions tailored to your needs.
- Home Central Financial: Provides various mortgage products, including jumbo loan refinancing .
- NTMR Funding: Assists with jumbo home loans and refinancing options .
Final Thoughts
Refinancing a jumbo loan in Cerritos requires careful consideration of your financial situation and goals. By understanding the requirements and working with experienced local lenders, you can navigate the process effectively and potentially achieve significant financial benefits. If you need assistance connecting with a reputable lender or have further questions about refinancing your jumbo loan, feel free to ask!