Jumbo Loans and 50 Year Mortgages
By Keith Gill
When you hear about 'jumbo loans' one automatically thinks about a double mortgage. A jumbo mortgage is a mortgage with a loan amount that is actually beyond the amount of a standard loan limit. Jumbo mortgages actually apply when agency limits do not cover the entire loan. Fannie Mae is an example of a large agency that buys the majority of residential mortgages. These companies set a limit on the dollar value of a mortgage they are willing buy from a particular lending company.
Today's current limit is $417,000 for a mortgage. This actually leaves home owners and those who want to purchase a home a chance to search for placement. The placement is actually investors such as banks. The banks step in with large amounts such as $1 million or $2 million rate.
In life there is always a risk. Jumbo mortgage loans are considered a major risk for lenders. If a jumbo mortgage happens to default, this means that it's more difficult to sell to a higher paying buyer or a luxury resident fast for the full price. Contrary to popular belief, luxury prices such as the $600,000 and up, is vulnerable to the markets lows and highs. This is why mortgage lenders want a large down payment rather than a low down payment or '0' down payments. A person who invests in a jumbo mortgage loan will pay a high interest rate because of the high risk.
Recently, mortgage lenders have come up with a way for potential home buyers to still purchase homes as the interest rates continue to climb. Lenders have developed what is now known as the 50-mortgage. This is keeping the American dream of home ownership alive and well. According to USA Today, a group of small lenders have been offering a 50-year 'adjustable-rate loan'. This ultimately keeps buyers from paying high monthly payments. With the 50-year mortgage, prices are kept very low.
If a person who is 40 years old and they purchased a house with a 30 year mortgage and they do not pay off their loan early they will be age 60 when their home is finally paid for. Now with the 50 year mortgage for a 2006 40 year old, they will be 90 years old when they are officially a 'paid-in-full' home owner.
Although a person who chooses the 50-year mortgage pays lower payments than a buyer with a 30-year mortgage, the borrower builds equity at a very slow pace and may cause the borrower's monthly payments to increase, the report said. Mortgage experts warn that the new 50-year mortgage is recommended for buyers who are planning to stay in their home for approximately five years, as the home loan's interest remains fixed.
About the Author
Keith Gill is an experienced and successful Mortgage Loan Banking professional and Real Estate investor who prides himself on his expert knowledge, advice and thousands of happy repeat clients. Keith Can be reached at going to his site at - http://www.YourLenderForLife.com
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