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Super Jumbo Loans

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What is a super jumbo loan?

A super jumbo loan, also known as a super jumbo mortgage, is very similar to jumbo mortgages. Here too, the loan amount does
not conform to the guideline limits set by government-sponsored enterprise (GSE). GSE’s are private financial services corporations (commonly known as Fannie Mae and Freddie Mac) created by the United States Congress to purchase home loans and guaranteed by the United States Government. Depending upon circumstances, any loan amounting to at least $1,000,000 is classified as a Super Jumbo loan.

Who generally benefits from a super jumbo loan?

Typically, it is valued between $1,000,000 to $5,000,000, but may even exceed that amount under certain special conditions.
This high-value mortgage is suitable for borrowers who are in the market for constructing or purchasing ultra-luxurious residential properties.

What are the eligibility criteria for obtaining a reverse loan?

Due to the large size of the loan, a super jumbo mortgage is usually not subject to the usual government regulations. Therefore,
the lenders have extremely strict requirements that need to be satisfied in order for them to approve a loan of this size. In order to get a super jumbo loan approved, the borrower is required to

·        Possess an excellent credit score of 700 or more

·        Make a large down payment

·        Have a lengthy and stable employment history with a consistent source of income.

Are there any other factors that determine the borrowers eligibility?

Apart from maintaining a great credit score, the borrower is also expected to have no late payments in the last two to three
years in order to qualify for this kind of loan. Also, the Debt-to-Income (DTI) ratio plays a vital role in determining the eligibility of the borrower as lenders generally tend to favor a low DTI ratio of around 38% or less. However, there have also been cases where even a DTI ratio of 43% is eligible for super jumbo mortgages, provided the borrower possesses additional assets.

What about the down payment for a super jumbo loan?

The amount of down payment to be made depends on the lenders and the risk level they perceive; if the lender deems the loan
as risky, expect a larger down payment (many lenders can demand up to 50% of the loan amount as down payment).

What role does the propertys appraisal value play in determining the loan value?

Again, just like the lenders of jumbo mortgages, lenders of super jumbo loans may require not just one, but two appraisals of the value of the property. With regard to these types of mortgages, in many cases, the loan to value (LTV) ratio is a maximum of 80% of
the appraised value of the property (some lenders even offer up to 90% of LTV).

How are the rates of interest on a super jumbo loan?

The interest rates charged on super jumbo mortgages are almost always higher than the rates for jumbo mortgages by around one to
two percent, due to the increased lending risk involved. Although the types of super jumbo loans and the term of these mortgages are similar to jumbo mortgages, with both fixed-rate and adjustable rate mortgages on offer, ARMs are more popular with super jumbo mortgages due to the lower interest rates and the flexibility in payment amounts. Most lenders offer these mortgages on primary homes only, which effectively means that the borrower is required to utilize the home as his primary residence and has to live there. However there are some lenders who offer mortgages on second and vacation homes as well.

Is there a cap on the maximum amount that can be borrowed under a super jumbo loan?

Unlike traditional jumbo mortgages, super jumbo mortgages do not have any cap on the loan amount that can be accessed. These mortgage amounts can go up to $20,000,000 or even more; the limit set ultimately depends on the lender and his ability to finance the loan and bear the risks involved.

 

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