Miami Jumbo Mortgage Options

New jumbo loan programs are coming into the market to address the large increase in jumbo loan applications. Due to the large increase in home prices, people buying an average-priced home in a big city (like Miami) may require a jumbo loan.

To allow more people to buy a home, some of these new jumbo mortgages have a 40- or even 50-year amortization. This means that the borrower has 10 or 20 extra years to pay the house which translates into lower monthly payments. Of course, this is good for the bank because it ends up making more money over the life of the loan.

Another aspect to consider is that mortgages for an amount over 80% of the value of the property require private mortgage insurance (PMI.) This insurance is necessary to insure the lender for the higher risk. Previously, borrowers of large amount of money would have to pay costly fees to cover for PMI. Right now, 80/20 & 80/15 jumbo loan programs are very popular because it helps borrowers avoid paying PMI. An 80/20 loan combination means that the borrower will carry two mortgages; the first mortgage is an 80% loan and the second one is a 20% loan.

Taking PMI into consideration, borrowers can get the 80% without PMI, and take a second mortgage at a slightly higher rate, which does not require PMI.