Many of us have an adequate understanding on conforming mortgage, however, not all of us understand that conforming mortgage is not the only type of mortgage that is available out there. In addition to the ever so popular conforming mortgage with its 30 year fixed interest rate, there is also 30 year jumbo mortgage rates. To some this may be as surprising as it is confusing, why are there two types of 30 year mortgage and what set them apart? Determining whether your loan is jumbo or conforming is already a challenge in itself, not knowing the differences between the two types of mortgage may lead to a more complicated process of taking up mortgage. With that having been said, below is a set of differences between the conforming and jumbo mortgage to help you better understand as well as to help your determine which category is more suitable for you and your needs.
The difference between the jumbo and the conforming loan typically boil down to a few of these important aspects:
- The set limit in the county of your residence
- The type of property you wish to purchase, or you currently own
The former has a significant part in the way your 30 year jumbo mortgage rates will look like in the end as one county may have a higher land value as well as property value. For instance, the value of both land and property in Springfield, Illinois greatly differ to that of the one in Beverly Hills, Los Angeles – these two aspects contribute to the differences of loan limit. Springfield may have set a limit of $400,000 while Los Angeles may have a limit of $650,000. Another difference that set the jumbo apart from conforming is the underwritings – conforming is much more flexible in terms of lending rules compared to jumbo. From the required down payment amount to the required credit score.
To be qualified for jumbo loans with its 30 year jumbo mortgage rates is not as easy as qualifying for conforming one. Due to the high level of risk, not only are you required to give a bigger amount of down payment and possess higher credit scores (with the minimum credit score of 700), the difficulty to find a mortgagor or lender is also higher – this is due to the fact that only a few banks offer the option and service. With that being said, chances are you will face more restrictions in financing and an extremely high interest rate. However, this does not necessarily mean you cannot shop around to get the best deal. If you are interested in taking a jumbo loan and have difficulties finding the best deal, below is the available 30 year fixed mortgage rates today:
- 30 year fixed rate jumbo loan with the interest rate of 4.125% and annual percentage rate of 4.132% for a loan of up to $750,000. The required amount for down payment is set at 25% with monthly principal including interest payment of $3,635 and closing cost of about $8,042.