The Jumbo refinance loan or the non-conforming refinance loan does not meet the traditional loan guideline requirements that are set by Fannie Mae and Freddie Mac. The Jumbo refinance loans normally exceed the maximum loan amount allowed and are harder to get in the modern market. Learn more about Jumbo refinance loans from Colorado Mortgage Pro experts.
The Different Types and Reasons to Refinance Jumbo Loans
The Rate and Term Jumbo Refinance:
The jumbo rate and term refinance either convert an adjustable rate mortgage, ARM into a fixed rate of lowers the present rate of interest and thus leading to lower monthly savings and payment over the loans’ life.
Home Equity jumbo refinances-In this type; the borrower is allowed to take out a new jumbo loan amount than the current one. The borrower pays the difference between the two during closing. The extra money in this type of loan can be used for home improvement, investing the equity pulled out to other investment tools or debt consolidation.
Custom line of credit- Just like in the home equity jumbo refinance loan, refinancing a loan to a custom line of credit helps borrowers pay for other essential expenses. The line of credit can be used to pay medical bills, pay for college tuition, invest the money, and make home improvement among other uses.
Areas of Consideration
The interest rates usually are higher on Jumbo refinance loans compared to the conforming loans. The rates are generally available in several forms; fixed and adjustable rate loan options. There are also temporary buy-downs and interest-only loans.
With the interest-only option loans, the borrower cannot build equity through the monthly interest-only payments. The borrower will be required to make voluntary principal payments so to build equity during the interest-only phase when making payments. The line of credit has typically a variable rate of interest, which can increase or decrease the monthly payment as the rates of interest fluctuate. The borrower can change a part of all of the outstanding line of credit to a fixed rate repaid in a 5-20 year term.
To get more information on qualifying or refinancing your jumbo mortgage loans, reach out to our Colorado Mortgage Pro specialists today.