You’ve made your mortgage payments on time, have above average credit and built up some equity in your home. Your looking for refinancing options to lower your interest rate, reset an expiring adjustable rate mortgage or want to consolidate some debt and your loan amount exceeds $417,000. What do you do? You should consider a jumbo loan refinance to help you accomplish your goals. This program allows you to refinance a primary residence, vacation property or even an investment property. Jumbo refinance loans have stricter qualifying guidelines compared to other types of loans but still allow for a lot of flexibility. A common myth about jumbo mortgages is that you need 20% equity in order to qualify. This is flat out wrong!
The reality is a jumbo loan refinance allows you to refinance with as little as 10% equity without having to pay mortgage insurance in many cases.
Some things to consider before a jumbo loan refinance:
- You need a credit score of 680+
- You need solid financial and payment history
- Do you have assets on reserve?
- You need stable employment history
- Do you have equity in your home?
- If you are self-employed have all your financials available
Why is the Jumbo Refinance Program so Great?
The Jumbo Refinance Program is the best and in some cases the only option when you want to lower the payment or shorten the term on your luxury home. (Please note – the total finance charges may be higher over the life of your loan). Even though it can be more difficult to qualify for compared to non-jumbo programs it is well worth the effort. For example, a high credit score, low debt to income ratio, and liquid assets on reserve are just a few compensating factors that will help you qualify and take advantage of some nice perks. Below are just a few of them.
Benefits of a Jumbo Loan Refinancing
- No prepayment penalty ever
- 90% financing available
- Payoff a 2nd mortgage
- No escrows required
- Interest only option available
- Obtain loans amounts up to $3M
- Choose from a variety of loan options and terms
- 2nd mortgage or HELOC combo loan available
- A small reduction in your interest rate could mean a large savings
Jumbo refinance loans have stricter qualifying guidelines compared to other types of loans. Qualifying for a jumbo loan requires higher credit scores, low debt to income ratios, and liquid assets on reserve. Below are just a few of the items a lender will look at when considering financing a jumbo refinance.
- Your total monthly expenses
- Your total gross income per month
- Your employment history
- Your credit score and payment history
- Your assets (checking, savings, and retirement accounts)
For a more in depth understanding on what you need to get prepared for when applying for a Jumbo loan check out our step by step guide “Simple Steps To A Jumbo Home Loan” ebook here.
Jumbo loan refinance guidelines
- 680+ FICO Score in most cases
- 90% financing allowed up to $750K
- 85% financing allowed up to $1.5M
- 80% financing allowed up to $1.85M
- 75% financing allowed up to $2M
- 60% financing allowed up to $3M
- Borrower’s debt ratio cannot exceed 43% of monthly pre-tax income
- W2’s. tax returns, pay stubs and proof of income are all required
Jumbo Cashout Refinance Loans
The Jumbo Cashout Refinance Program is an excellent option to leverage the equity you have in your home to be able to pay off debt, do home improvement, take a vacation or simply pullout cash for anything you want. It’s one of the most effective ways to consolidate high interest debt, including credit cards under one low fixed payment per month which may be tax deductible. You can also use it to refinance out of other types of mortgages to get more favorable terms or even pay a second mortgage off.
Disclosure: Even though a lower interest rate can have a profound effect on monthly payments and potentially save you thousands of dollars per year, the results of such refinancing may result in higher total finance charges over the life of the loan.