The Risks and Benefits of a Jumbo Mortgage Loan - American Home Funding

The Risks and Benefits of a Jumbo Mortgage Loan

Last updated 21 days ago

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For some, a home that falls under the lending caps from Fannie Mae and Freddie Mac just isn’t an option. When you want a larger Denver home with a larger mortgage, you must go for a jumbo mortgage loan in Denver or not at all.

Benefits of a Jumbo Mortgage Loan

Whether you want a jumbo loan or are forced into one by a high priced market, there are some benefits that come with obtaining and keeping current on a jumbo home loan in Denver:

• They are excellent for your credit score, if you pay them consistently. Staying current and paying off one of these loans lets lenders know that you are serious about your financial obligations.
• They allow you to buy a home for the future. If you know your family will grow, buying a home that is too small is not a smart financial option. Jumbo loans let you buy one home and stay there comfortably.
• They allow you to use a larger salary. If you don’t have much of a down payment saved, jumbo home loans can let you utilize your larger salary in a higher monthly payment.

Risks of a Jumbo Mortgage Loan

There are many benefits of a jumbo mortgage loan, but there are also a few risks to consider:

• Greater risk of default, that could possible cause poor credit scores.
• Higher interest rates make your payment more every month.
• Low loan-to-value ratios mean that you’ll own less equity in the home than you would with a conventional loan since you’ll have to borrow most of what the home is worth. This puts you at a higher financial risk should you ever be forced to sell.

Although jumbo mortgage loans are risky, Derrick Strauss and the experts here at American Home Funding know how to weigh them against the benefits. We can help you get that big home and even have a loan calculator for Denver to help you. Contact us today to learn how to pre-qualify or if you have any questions about any type of home loan.

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