1st American Mortgage asked:


Jumbo mortgages are not so different from standard mortgages but there are a few key things that are worth looking in to.

Jumbo Mortgage Loans

A jumbo mortgage loan is a loan taken for property that is high-priced.. In Colorado, as in most of the U.S., a jumbo mortgage loan is any mortgage that exceeds $417,000 – the limit set by Fannie Mae and Freddie Mac for conforming loans.

Fannie Mae and Freddie Mac, the two agencies that buy the majority of real estate mortgages, will not finance loans greater than $417,000 in most states; however Alaska, Hawaii, and a couple others are exceptions. Therefore, the large jumbo mortgage loans are sold to other investments, often banks and insurance companies, and so a jumbo mortgage loan falls into a different category. Rates for a jumbo mortgage are also higher than conforming loans because there is more risk involved.

What This Means for Jumbo Mortgage Interest

The size of a jumbo mortgage loan means there is more to lose. The size, coupled with other factors, results in somewhat higher jumbo mortgage rates than those carried by conforming loans. Since percentage points on jumbo mortgage rages can mean sizable payment differences, buyers should shop around for a good lender when applying for a jumbo mortgage loan in order to find the best rate. Buyers should shop around for a good lender when applying for a jumbo mortgage loan in order to find the best rate.

In truth, jumbo mortgage interest rates are only one thing to consider when shopping for a jumbo mortgage. There are additional fees and closing costs to be considered that could even out the difference in jumbo mortgage rates. Sometimes, the company with the jumbo mortgage rates is actually the cheapest, all things considered.

Also, buyers shopping for good jumbo mortgage interest rates need to consider their goals, plans, and all of their options. Like conforming mortgages, jumbo mortgages are offered in a variety product lines. Buyers have the option of taking out loans with adjustable jumbo mortgage rates with 3 or 5 year locked rates that adjust after that period, or 15 or 30 year fixed jumbo mortgage rates that never change.

Deciding which type of product (variable or fixed jumbo mortgage interest rate) is better for you depends on whether you plan to stay in the home for more than that locked 3-5 year period, or whether you will refinance the loan within 3-5 years anyway.

Buyers should not be scared off from higher jumbo mortgage rates; jumbo mortgage rates are higher only by a quarter of a point or so for well qualified buyers. What’s more, jumbo mortgages are the only option for home buyers in many parts of the country because $417,000 really isn’t that high a price in today’s housing market. As a matter of fact, jumbo mortgage loans are the only type available in many areas. The best way to find a good jumbo mortgage loan is the find a reputable and experienced lender with good rates. A great mortgage lender will take the time to understand your needs so they can help you select an appropriate product.

Steve Kyles asked:


For many Texas families looking for a first mortgage, the proposed mortgage rate can often be the one determining factor in whether or not the desired home is affordable. A low mortgage rate in this day and age is no longer a desire, it is a necessity. Low mortgage rates can make it possible for families to realize the dream of home ownership. With the cost of living increasing much faster than the standard rate of pay, a low mortgage rate means financial stability.

Finding a low mortgage rate in Texas starts with the mortgage loan officer. Low mortgage rates aren’t under every mortgage loan officer’s pillow, as some are bringing rates to the table which are nearly twice as high as other mortgage loan officers. What exactly is the difference? The higher the mortgage rate and the more the process costs you, the more business a mortgage loan officer is likely to earn if they are paid strictly on commission. Bad news for you can mean good news for the mortgage loan officer. Mortgage companies that offer their loan officers a fairer determining factor in their salary or commission are more likely to bring better offers to you.

Online loan officers seem like a really good idea. They try to make it simple for you. All you need to do is enter your information and Presto! You have mortgage offers flooding your email inbox, right? Sure, and not exactly. People with perfectly spotless credit may receive mostly fair and even a few low mortgage rates by doing it this way. But for truly low mortgage rates, the personal touch is still a requirement. Even people with nearly perfect credit don’t typically have spotless credit. Something as simple as a disputed charge or a $1 charge from a credit card company that you never knew about can ruin your chances of a low mortgage rate from an online source. Yet when dealing with credit scores, mortgage rates, and financial obligations, there is not real black and white formula which can spit out exactly what is available to you. Being able to talk face to face with mortgage loan officers makes a huge difference. For those who knowingly do not have perfect credit, which is most of us, there really is no other alternative than a real live in the flesh mortgage loan officer.

If your mortgage loan officer is truly searching for the lowest mortgage rate possible, they will gladly explain the process, how they came up with the low interest rate they are offering you, and why they can’t go any lower. Mortgage rates fluctuate nationally, and there are various low mortgage rate options available. Some people want to opt for fixed rates while others are looking for balloon payments. These things can not be adequately discussed with an online mortgage loan officer. Perhaps you believe you know exactly what you are looking for and why. A good and ethical mortgage loan officer can not only bring you a low mortgage rate, but they can help guide you in the process of deciding which type of mortgage is right for you. Often the mortgage loan officers have information that you don’t. Mortgage loan officers can often guide you in the best direction to save you money beyond a low mortgage rate.

Low mortgage rates are an imperative requirement for young families. While online mortgage loan officers find young families a high risk category, not all mortgage loan officers will. Some mortgage loan officers can find deals that simply blow the internet mortgage loan officers clear out of the water. This is exciting stuff when you think about it. Despite the fact that young families are not well established, they can still be an excellent risk for a low mortgage rate. Established families are typically a good risk as well, although some mortgage companies do not give them the credit, so to speak, which they deserve since they were renting properties for the first twenty years or so of marriage. These factors do help determine whether or not you will receive a low mortgage rate. It’s not necessarily fair, but it’s true.

When seeking low mortgage rates and the best mortgage package available for your personal circumstances with an online mortgage loan officer, there is no consideration given to your personal goals and desires for your future. Online mortgage loan officers can only determine a given set of information based on a predetermined formula, and none of it has anything to do with flexibility, probability, dreams, goals, wants, needs, or hopes. The right personal mortgage loan officer is able to sit down with individuals, couple, and families, and look at a larger picture and hear what the clients are hoping to attain for themselves and their families before making recommendations. There is more to a low mortgage rate than just a low mortgage rate.

All of the variable and all of the factors which go into finding the right mortgage package can only be well put together by finding the right mortgage loan officer. The right mortgage loan officer means different things to different people, but low mortgage rate always falls somewhere into the description. Knowing whether or not you are receiving a low mortgage rate depends on your circumstances, your credit rating, your income, your stability, and of course, the present market. You should walk into a mortgage loan officer’s office understanding what you think would be a low mortgage rate, and why. You should also remember that you may not have all of the information available to you to really determine what a low mortgage rate will mean for you.

Aaron Crawford asked:


Acceleration – This refers to a lender’s right to request immediate payment of the balance of the loan when the borrower defaults or by using a stipulation from a Due on Sale Clause

ARM / Adjustable Rate Mortgage – A mortgage that has an interest rate that is periodically adjusted. This adjustment is based off of criteria from an agreed upon index and is also called a variable rate mortgage.

Amortization – Mortgage split into periodic, equally sized payments so that at the end of the agreed upon mortgage period the balance is paid.

APR / Annual Percentage Rate – Expression of the yearly rate of the mortgage measured by mortgage’s full cost including all expenses and fees.

Appraisal – A documented official estimation of a property’s value.

Assessment – Tax on a property that serves a specific purpose, like sewers for example.

Assumption – The agreement between a buyer and a seller in which the buyer is taking over payments from the seller on the seller’s existing mortgage.

Balloon Mortgage – This is a loan whose amortization schedule exceeds the length of the mortgage. A final (often large) balloon payment is paid at the end of this end of this extended period of time.

Bridge Loan – A secondary trust used for collateral by the homebuyer’s present property, which permits proceeds to be utilized to close on a new property purchase before the existing one is sold.

Buy Down – A buy down occurs when a lender allows a mortgage rate to be lowered by buyer subsidization.

Caps – Safeguards that set limits on the amount of interest rate or payment change on a monthly basis for ARM’s

Change Frequency – The increment of the number of months that a rate may change in an ARM

Closing – The closing is the final meeting that occurs involving the property buyer, the seller, and the lender during which all legally binding papers are signed and the property purchase deal is “closed” and property ownership is transferred.

Closing Costs – The expenses and fees incurred either by a home buyer or seller at a closing for a variety of tasks, charges, insurances, etc.

Conversion Clause – ARM provision for having the mortgage’s rate be converted to a fixed-rate at some point during the life of the loan.

Credit Report – Official documentation noting the status and history of a potential buyer/borrower.

Default – In a nutshell, not making a payment on time; legally failing to provide required payment to lender by specified deadline.

Down Payment – The money paid during a property purchase that fills the gap between sale price and moneys borrowed.

Equity – The amount left over when comparing money owed on a property to the property’s current value.

Escrow – An escrow account is held by the lending institution in which the borrower pays money for insurance or tax reasons. Escrow describes the deposits that are held when a loan is pending closing.

Escrow Payment – The part of a borrowers monthly mortgage payment that the lender holds to pay for insurance, lease, or tax purposes.

Fannie Mae – Federal National Mortgage Association; a government backed organization that buys and sells residential mortgages.

Freddie Mac – Federal Home Loan Mortgage Corporation; a government backed organization that acquires mortgages from various depositary institutions and HUD-approved lenders.

FHA Loan – A loan that the Federal Housing Administration insures, open to any home buyer that meets certain requirements.

Fixed Installment – The regular monthly payment that is due on a mortgage.

Fixed Rate Mortgage – A mortgage loan whose interest rate will not change for the entire duration of the loan.

Foreclosure – Process by which a mortgage lender legally repossesses and forces the sale of a mortgaged property as a result of the borrow defaulting.

GPM / Graduated Payment Mortgage – Flexible mortgage payment plan in which the borrower’s monthly payments increase for a specific timeframe.

GEM / Growing Equity Mortgage – Mortgage in which the borrower’s payments increase over a set period of time; this larger amount is then applied to the mortgage’s principal in most cases.

Hazard Insurance – Insurance used for protection against various forms of property damage and/or loss.

HUD-1 Statement – This is a document provided by your lender/broker that includes a detailed listing of the moneys needed at closing, including points, escrow, commissions, and other fees.

Impound / Reserves – The amount of the buyer’s monthly payment kept by the lender to pay for various insurances or taxes.

Index – The publicly available market interest rate used by lenders to determine the difference between ARM rates and current interest rates and to set loan sale rates on fixed rate mortgages.

Interest – Monetary fee charged by a lender to a buyer for borrowing money.

Interest Rate Ceiling – The agreed largest possible interest rate for an adjustable rate mortgage.

Interest Rate Floor – The agreed lowest possible interest rate for an adjustable rate mortgage.

Interim Financing – A short-term or temporary loan made while property construction is being completed.

Jumbo Loan – A mortgage that exceeds the limits set by Fannie Mae and Freddie Mac.

Liabilities – The debt owed by a buyer.

Lien – A claim made on a piece of property for exacting payment of a financial obligation.

Lock – Mortgage lender’s written guarantee that the quoted rate is good for a set period of days from the time of issuing.

Margin – The total that a mortgage lender adds to the index on an ARM to set the adjusted rate.

Market Value – The price that a buyer and seller would agree upon for sale of a property.

Maturity – The date that a loan’s principal is scheduled to be paid in full.

Mortgage – Document pledging a property to a loan provider as security for a debt’s payment.

Mortgage Broker – One who receives compensation for the work of bringing a buyer to a lender for the purpose of completing a loan arrangement.

Mortgage Insurance – Money paid on a regular basis for the purpose of insuring a mortgage on a property whose buyer has less than 20% equity.

Note – A document specifying that a borrower is to repay a loan at a specific interest rate over a specific period of time.

One Year Adjustable Rate Mortgage / One Year ARM – Loan in which the interest rate changes on a yearly basis.

Origination Fee – Fee charged by a lender for the work involved in preparing a loan.

Owner Financing – Property sale in which the seller provides at least some part of the buyer’s financing.

Payment Change Date – Date when a new payment amount begins on an ARM or GPM.

PITI – Principal, Interest, Taxes, and Insurance

Points / Loan Discount Points – Interest money paid at closings for the purpose lowering the cost of monthly loan payments. One Point is equal to one percent of the loan’s total amount.

Power Of Attorney – The legal authorization of one person being able to act in behalf of another.

Preapproval – The process of evaluation a potential buyer goes through to decide how much money a loan can be given to them for.

Prepayment – Mortgage stipulation permitting the borrower to make additional payments before the maturation date.

Prepayment Penalty – Fee charged by a lender to a borrower when the borrower repays the a loan earlier than an agreed upon date.

Principal – On a loan, the total amount that remains unpaid by the borrower. On a monthly payment, the amount that goes towards the final paying of the loan.

PMI / Private Mortgage Insurance – Insurance that a buyer must pay for; required when a borrower does not provide a 20% down payment on purchase of a new property.

Rate Lock – Commitment given by a lending institution to a buyer that guarantees a certain interest rate is valid for closing for a specified period of time.

Real Estate Agent – A person that is licensed to negotiate the sale of property.

Recission – The cancellation of an agreement or contract; the law giving a homeowner 3 business days to cancel a loan arrangement. “Right of Recission”

Refinancing – The obtainment of a new replacement mortgage on a property that is already mortgaged.

Satisfaction of Mortgage – Document issued to a borrower on the occasion of their repayment of said loan.

Second Mortgage – The acquirement of an additional, subordinate mortgage on a property that is already mortgaged.

Servicing – All the work involved to keep a mortgage in good standing such as paying various tax, insurance, and other costs.

Shared Appreciation mortgage – A mortgage in which the buyer receives a property for less than current market value; in exchange, the seller is granted a portion of future property appreciation values.

Simple Interest – Interest calculated only on the balance owed.

Step Rate Mortgage – A loan in which the interest rate increases based on a set schedule until a set point, after which the rate remains constant.

Title – The document declaring a property’s ownership.

Title Insurance – Insurance policy that insures a potential home buyer or lender against errors in a title search.

Title Search – A legal examination of records to determine who is the rightful owner of a property.

Truth in Lending – Federal law that requires the lenders to disclose the APR to a buyer after applying for a loan.

Underwriting – The decision made by a lender on whether or not to provide a loan to a borrower based on their qualifications.