Miami Jumbo Mortgage Particulars

The interest rate charged for a jumbo loan is usually about half a point higher than a conventional loan. The interest rate will vary depending on things such as mortgage amount or property type.

The rates are higher because the risk for the lender is also higher. This is so for several reasons. First, the lender can not sell these loans to the two main buyers of mortgages in the secondary market. Second, it is harder for the lender to sell a luxury residence quickly for full price in case the loan goes into default. Third, luxury home prices are more vulnerable to market highs and lows.

Due to these added risks, lenders will also ask for a higher down payment. The payment may be for as little as 5% and as high as 20% or higher. Of course, it will also depend on your credit history.

Also, since jumbo home prices can be more subjective, many lenders may require two appraisals on a jumbo loan. Once they have the two appraisals, the lender will either choose the lower appraisal or the average of the two.

If in the future you want to refinance your jumbo mortgage, you may find it expensive to do so due to closing costs. Some title insurance companies will offer up to a 50% discount, often required by law for those refinancing within 1 year to 10 years. The largest discount is for those refinancing within the first year.