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Kelli Haynie
American Homefront Mortgage
3305 Northland Drive
Suite 208
Austin, TX 78731
Phone: 512-423-4624
Fax: 512-407-8414
Contact Form |
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Austin Texas Conforming and Non Conforming Loans
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Conforming Loans
100% Financing
Competitive Rates
80/20 Combo
No Mortgage Insurance
Full Documentation / Income
Stated Income – Verified Assets
Stated Income – Stated Assets
No Ratio
Interest Only
30 and 40 yrs Terms
Adjustable Rates |
Conforming" loans are so called because the loan sizes 'conform' to the maximum loan amounts which may be purchased by the Federal National Mortgage Association (FNMA, or Fannie Mae) and the Federal Home Loan Mortgage Corporation (FHLMC, or Freddie Mac). "Jumbos" are mortgages with loan amounts which exceed the current FNMA/FHLMC limit.
Every year, new loan limits are announced for one- to four-family loans which may be purchased by the Federal National Mortgage Association (FNMA, or Fannie Mae) and the Federal Home Loan Mortgage Corporation (FHLMC, or Freddie Mac). These corporations are the two largest "secondary market" agencies -- corporations which purchase closed loans from mortgage lenders.
For the year 2006, loan limits look like this:
For conventional mortgages (those which may be purchased from local lenders by national organizations such as Fannie Mae and Freddie Mac, the loan limits for owner-occupied properties are:
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- One-unit properties: $417,000
- Two-unit properties: $533,850
- Three-unit properties: $645,300
- Four-unit properties: $801,950
- For properties in Alaska, Hawaii, Guam, and the U.S. Virgin Islands, the loan limits are 50 percent higher.
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Non Conforming (Jumbo) Loans |
Any loan above the maximum loan amount established by Fannie Mae or Freddie Mac, is a Jumbo Loan. These limits are set yearly. The conforming loan limit for 2006 is: |
- For a single family residence: $417,000
- 2 families: $533,850
- 3 families: $645,300
- 4 families: $801,950
Any loan whose full amount is not covered by these limits is an alt-A mortgage loans.
These limits are 50% higher for Alaska, Hawaii and the US Virgin Islands, compared to the rest of the country.
Large investors such as insurance companies and banks step in to fill that part of the market which needs greater amounts, usually going in the range of $1 million to $2 million.
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The average interest rate for jumbo loans is usually higher as compared to confirming loans. This is expected because jumbo loans mean the lender is taking a higher risk.
Why jumbo loan means a slightly higher risk for the lender?
Reason is simple. If such a loan defaults, the lender will find it harder to sell a high-priced luxury home for full price and that too quickly. Also, these luxury prices tend to be very vulnerable to market highs and lows. Keeping in mind these risk factors, lenders take a higher down payment from people seeking these jumbo loans. They also keep interest rates higher, usually in the range of .25% to .5%, compared to conforming ones. However, like any other loan, interest rate will depend upon the type of property and the loan amount.
The higher down payment for jumbo loans is usually in the range of 5%. The no-money down programs, an option which is available with conforming loans, is usually not available with jumbo loans. Instead, jumbo loans may require a minimum 5% down payment. Keeping in mind the large amounts involved, variable loan programs are available to clients. Out of these adjustable rates mortgages are quite popular now-a-days because it involves lower payments. Various jumbo mortgage companies offer different programs. For example, one company calls loans for a single family residence, exceeding $650,000 Super Jumbo Mortgage, with its attendant unique advantages. People wanting to finance expensive properties, or those investment-minded people who want to leverage their assets, find such loans fitting their bill. The continuous increase in the rates of housing properties in recent times has led to a large increase in the number of people applying for jumbo loans. Today’s property prices dictate that not only for a luxury residence, but even for buying a modest ranch or Cape Cod house, you have to take a jumbo loan.
Because more and more people want jumbo loans when buying property in big city areas and surrounding suburbs, new programs are being offered. Today, new loans can have a 40 or even 50 years amortization, there is now an interest only option also, allowing the borrower to defray any repayment of principal for a few years. Thus, quite a few options are now available to a jumbo loan applicant, and that’s always a good thing. |
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