5 Things to Consider for Jumbo Home Loans in California

5 Things to Consider for Jumbo Home Loans in California When it comes to buying a home, there are certain things you should think about. One of the most important aspects you should look into is identifying the type of mortgage that works for you.

What happens when you are purchasing a home in a high value market such as California? You may need jumbo home loans in California to buy your dream home. In this post we will go through what to consider as you search for for jumbo home loans in California.

Understanding a Jumbo Home Loan – Jumbo home loans are the loans for amounts exceeding the conforming loan limits. Typically, the best rates and terms are reserved for loans fitting within the conventional home loan limits in California. Currently, however, there are some excellent Jumbo loan products available with very good pricing. The pricing is highly competitive and quite similar to conventional loan pricing.

How does a jumbo home loan work?

Like conventional mortgage loans, you can get jumbo home loans in different terms or repayment schedules. They can be fixed or adjustable rate loans. But jumbo home loans work differently than conventional mortgage loans.

These loans come with slightly different guidelines than other types of mortgage loans. You’ll need to meet requirements on the types of properties, down payment, credit score and debt-to-income ratio requirements to get a jumbo home loan.

5 Useful Tips to Consider for Jumbo Home Loans in California 1. Requirement of Cash Reserves Most lenders want to know that you can make payments consistently and regularly for jumbo loans. Your lenders may ask you for bank statements to prove that you have enough cash in the bank to handle the payments. It’s common for lenders to ask borrowers for jumbo loans to get a year’s worth of expenses in reserve prior to getting a loan, although there are some products available that do not have these requirements.

Even, the cash in your bank account isn’t the only way to meet the cash reserve requirements. In some circumstances, business and gift funds may count towards your cash reserve needs.

3. Consistent Income Lenders only provide jumbo loans to buyers having predictable and constant income. Usually they ask to see up to two years of W-2s, tax documents and 1099s when underwriting for a loan. For a jumbo home loan, your lender may ask for more documents and proof that your income is unlikely to change after getting a loan.

4. Manual Underwriting Most jumbo home loans are underwritten manually. A finance professional will take a closer look at the credit report, assets, and bank statements and bring to light any previous mishaps. Remember, it can be more difficult to qualify for a jumbo home loan, especially if you’ve a bankruptcy or foreclosure on your report. Working with a professional who understands and has access to jumbo loan programs is very important.

5. VA Funding Fee VA funding fee will be much higher on jumbo home loans on the basis of increasing loan amount. So, it’s something you should plan for beforehand. The funding fee depends on different factors including your down payment.

Fortunately, you can ask for a concession from the seller or you may be able to finance it into the loan.

Final Consideration – Jumbo loans are large home loans that are much higher than the conforming limits. These home loans are the fact of life for people living in California. No matter how good your credit score is, if your loan amount is over the conventional limit you’re forced into what seems like an inferior product – paying higher rates than you’d do for the same loan at a lower amount of loan. That does not have to be the case, however. There are programs available on the wholesale market that can help obtain market rates, even finance up to 90% loan to value on a jumbo product – in some cases with no mortgage insurance!

All California Lending has wholesale partners to provide you with excellent options for jumbo home loans in California. If you want to go over available options in detail, feel free to contact us today at (877) 462-3422.