By: Alejandra Torres
Searching for something big to help revamp your mortgage business? Say hello to Jumbo loans, the mortgage solution that’s helping borrowers across the country secure their forever homes, while brokers score big deal earnings.
These types of loans are not like your usual agency loans – they require larger loan limits, have strict borrower requirements, and of course, are jumbo.
Whether you’re new to closing these loans or you’re a seasoned pro, it’s important to remember 3 keys points when it comes to closing Jumbo.
- Jumbo Loans are BIG
First things first: Jumbo loans are, well, jumbo – so much so that they can’t be guaranteed by the U.S. government-sponsored agencies (Fannie Mae and Freddie Mac). The loan amounts are also above the standard conforming limit set by the Federal Housing Finance Agency (FHFA), making them the luxe loans of the mortgage industry.
So how big are they? A typical jumbo loan can go up to $2.5 million with interest rates also being higher than those from a usual conforming loan. Despite having sky high loan amounts and interest rates, these loans are still at times accessible to all type of borrowers.
Case in point: during the 2020 COVID-19 pandemic, jumbo interest rates hit an all-time low thanks to a fluctuating real estate market. That’s why a wide range of borrowers were able to lock in unusually low Jumbo rates. It’s important to stay updated on market changes – you never know which borrower may benefit from this type of solution.
- Big Loans = Bigger Responsibility
Since Jumbo loans do have higher loan limits, they are typically more difficult to obtain. Lenders usually require prospective borrowers to have higher credit scores (around 720 or above) and sufficient funds.
In addition to high credit scores, lenders also require more documentation from Jumbo borrowers. Brokers should prepare their clients for stringent guidelines with their paperwork. This is due to the increased risk, so lenders want to protect themselves in the event the borrower is not able to pay back the mortgage.
Keep in mind – while Jumbo loans are generally stricter, some products do offer borrowers some flexibility. Partnering with a lender that offers a full suite of Jumbo products (Jumbo QM and Non-QM solutions) can better help you serve clients that require certain needs for their Jumbo mortgage. Click here to see our full list of Jumbo offerings.
- Jumbo Can Help Diversify Your Business
In today’s mortgage industry, mortgage pros are all equipped with similar loan offerings. If you truly want to stand out and take your business to the next level, consider adding Jumbo solutions to your portfolio to reach a new set of customers.
You can be an expert on all things conforming or commercial, but if you too can provide Jumbo products, you have the chance to gain a strong reputation for being a one-stop shop provider. Borrowers will want to work with you and only you for all their mortgage needs.
Knowing your clients will also help you determine whether Jumbo fits their scenarios. While you will likely work with seasoned pros who are searching for the picture-perfect mansion by the water, you’ll also see first-time homebuyers and clients who are in the market for townhomes, condos, and even 2-4-unit properties.
Now that you know how Jumbo loans work, you can decide how you want to incorporate them you’re your business portfolio.
One thing is for sure – adding these solutions will help you become a one-stop solution provider your clients need in today’s mortgage climate.
Ready to start your Jumbo business? Head to our Get Approved page to drop details about your deals and connect with one of our team members to help get you started with our network.