Jumbo mortgages are best suited to those who are self-employed. Business owners take a minimum of two years to get their employment status verified, and hence, they cannot buy homes. Such people can also benefit from the jumbo mortgage loans.
Jumbo mortgage loans should not be confused with standard mortgage loans. Following features of the jumbo mortgage loans distinguish them from the latter:
• Pay-off periods are longer.
• Interest rates are higher
• Minimum down payment requirements are also higher
• Detailed analysis of the proposed property is done
Standard mortgage loans, on the other hand, offer a 30-year long pay-off period in order to reduce the monthly payment amount.
However, there are some risks associated with Jumbo Mortgages. High interest rates and down payments are the negative aspects of this type of loan. Besides, it poses a great risk to the lenders. The process of selling luxurious property for full price becomes daunting in case the jumbo mortgage is in a ‘failure to pay’ status.
Following are some tips to be borne in mind when choosing a jumbo mortgage loan lender:
• To get the best possible rate on your jumbo mortgage loan, you should get several quotes from different lenders, and a do a detailed analysis.
• Bear in mind that several pitfalls are associated with the ‘interest-only’ and ‘adjustable’ rate mortgages. The monthly payments increase significantly after the stipulated period is over.
• As the introductory period comes to a close, refinancing also becomes difficult.
• Try to stay away from assertive lenders who aim at big commissions.
To conclude, speak to several lenders before taking the final decision.
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