California Jumbo Mortgage Loans

California Jumbo Mortgage Loans

Author: J. Hale

A jumbo loan is a loan that is higher than the conforming loan limit. In California, the conforming loan limit in 2006 is $417,000. However, because the price of homes in California has been skyrocketing over the last decade, some members of Congress are trying to raise California’s conforming loan limit. Because of the high cost of homes in the state of California, jumbo loans are not so uncommon. This article explains what you need to know when obtaining a California jumbo mortgage loan:

Location Matters
If you live in an area of California where the average price of a home is above the conforming loan limit, chances are many more lenders will offer jumbo mortgage loans. These high-cost cities will have a higher number of lenders that offer jumbo mortgage loans. However, if you live in a part of California where the average home price does not exceed the conforming loan limit, you may have to shop outside of your local area in order to find a lender willing to finance your jumbo loan.

Expect a Higher Interest Rate
Conventional loans are funded by government sponsored entities, such as Fannie Mae and Freddie Mac. Jumbo loans, however, are not sponsored by these government agencies. Therefore, when you apply for a jumbo loan, you will receive a higher interest rate than you would have on a conforming loan because a jumbo loan represents more risk to your lender.

Refinancing Will Be Difficult
The conforming loan limit on a refinance mortgage in California in 2006 is $208,500. This means that you’ll have to pay your mortgage more than halfway off before you can refinance into a conventional loan. Borrowers should keep this in mind when deciding whether or not a jumbo loan is right for their needs.

Visit California Lending Hub to see our Recommended California Jumbo Mortgage Lenders, whether you are looking for home purchase, refinance or a home equity loan.