Some people enquire about what Jumbo loans in Texas are and how they work. Those are not very complex loans, but they have some particularities that are important to know. In addition, they allow access to different and higher than average financed amounts.
What are Jumbo loans in Texas?
The simplest way to describe a Jumbo loan is to say that it is a conventional mortgage that the government doesn’t insure but that exceeds certain funding limits.
These funding limits exceeded by the Jumbo loan are the maximum limits set by the two government-sponsored enterprises (GSEs). These companies are in the business of purchasing and securitizing mortgage loans, Fannie Mae and Freddie Mac.
So, we already know the main difference between a conventional mortgage loan and a Jumbo loan in Texas: the amount. The Jumbo loan will be able to request a higher amount than the traditional loan.
However, there are other differences, for example, the application conditions.
Texas Mortgage Loan Limits and Differences
One thing is important to remember: the Jumbo loan limit in the states can usually vary depending on the county. However, this is not the case in Texas.
In Texas, there is a unified limit for all counties. This applicable limit is $647,200. In other words, if the mortgage you must apply for exceeds $647,200, it is automatically considered a Jumbo loan.
In any case, it is always a good idea to look at the country’s loan limits. You can do it from this link.
What to consider if you need a Jumbo loan in Texas
First of all, and as is logical, it is necessary to have a very good credit history before applying for one of these loans.
If the credit score is important in any loan,it is simply vital in the case of an extended mortgage loan. Remember that this type of loan will be considered oriented to purchasing high-end or luxury homes.
An average user will find it difficult to access this type of loan. Not only because of the credit history, which must be spotless but also because, in general, the conditions will be very restrictive.
Another factor to consider is the home’s average value and the loan limits applied to them. For example, the Jumbo loan limit is far away in an environment where the average home value does not exceed $400,000.
Generally, as soon as you review the mortgage market, you realize that banks are not very keen on granting this type of loan. It is very concrete financing, particular, and oriented to a user profile that is also quite specific and distinctive.
Are there alternatives to these extended loans?
There aren’t many alternatives to this type of loan. Perhaps the most obvious one is to use your funds to minimize the impact of the mortgage.
For example, if we purchase a $700,000 home and need to finance $650,000, we would need a Jumbo loan. However, in the same situation, if we keep our savings equity of $150,000 and add it to the purchase, we will reduce the mortgage to $450,000. Therefore, we would be within a conventional loan in the latter case.
It is important to understand that this is not a loan for just any user. Even if it is the dream of your life to buy that luxury home, if you do not meet the profile, income conditions, job stability, and credit history required, you will not be able to access extended financing.
On the other hand, from a practical point of view, it is not an interesting product for an average user either. In the first place, it is very expensive since, although the applied interests are the same or similar to a conventional mortgage, the application period, the amount, and the installment will be much higher.