The federal government sets limits for housing mortgages based on the prevailing market conditions. If you need housing finance beyond the set limit, you'll have to shop for jumbo loans rather than conventional mortgages. The Jumbo loan limit in Seattle is set at $741,750. Although it's among the highest in the country, many potential homebuyers still find out they need as much as 40% down payment to bring the mortgage amount within the set limit. How do you stop yourself from typing up too much cash when buying a home in Seattle, WA?
Work with private lenders
Financial institutions that do not work with Freddie Mac or Fannie Man can afford to take the risk and lend out higher amounts. These loans are known as jumbo loans. As long as you have a high-paying job, excellent credit score, and valuable assets, private lenders will be more than willing to offer you jumbo loans at reasonable rates. If these traits are absent, you still have the option of approaching your bank for a pre-approval.
Who sets the standard for jumbo loans?
Regular mortgages need to meet preset guidelines because they're usually sold to the federal government. However, the lender has to retain jumbo loans indefinitely. Thus, they have the final say on the credit score to allow as well as other documentation.
Naturally, you'll expect much higher standards for jumbo loans because the lender bears all the risk. For example, lenders typically demand a credit score between 700 and 720, while a score of 650 would have been sufficient for conventional mortgages. Furthermore, the debt-to-income ratio is usually stricter. Thus, your financial decisions before applying for the loan can influence your chances of obtaining a jumbo loan in the Seattle real estate market.
What is the necessary documentation for jumbo loans?
For many borrowers, getting the right documentation is the most challenging part of securing a jumbo loan in Seattle. For starters, you'll need documents that prove you have a significant reserve fund, stable and sufficient income, and a great credit score. You'll also need to show you have assets to fund the loans. Thus, you may need to provide W2 forms, investment statements, bank statements, and check stubs.
Are Jumbo loans more expensive than conventional mortgages?
Jumbo loans do not have to be more expensive than conventional mortgages. The competition in the space favors borrowers because lenders will be jostling to earn your business as long as you meet the requirements. Thus, it's not uncommon to find Jumbo loans with similar or lower interest rates than conventional loans. Many lenders also tend to waive fees, appraisals, and closing costs to make the process smoother for borrowers.
Are you thinking about buying a home in Seattle, WA? Do not hesitate to get in touch with us at Seattle's Mortgage Broker. We take pride in being one of the best real estate companies in Seattle, and we offer diverse financing options for potential homeowners. Call Seattle's Mortgage Broker today: 206-251-0818.
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