Understanding Conventional & Jumbo Mortgages
Do you have a 3% or greater down payment, PERFECT credit and can document your income? If so, a conventional (Fannie Mae or Freddie Mac Conforming) loan is probably the best option for you. If not, you may want to look at a FHA or Federal Housing Authority loans, a 100% RD or USDA Rural Development loan, or if you are a veteran or spouse of a veteran a VA or Veteran Administration loans may be the best option. Contact a Smart Move Agent before contacting any lender about a mortgage. We know which lenders give our clients the best rates and which will say YES or NO to your unique financial situation!
Conforming loans tend to offer the homebuyer the lowest rates and mortgage insurance expenditures. The current maximum loan amount for a single family residence in the State of Louisiana was changed in 2018 to $484,350 from the previous maximum of $424,100. A homebuyer seeking to purchase a duplex as of the change in 2018 will have a maximum loan amount of $620,200, a triplex is $749,650 and the maximum loan for a four-plex purchase is $932,600. For larger home purchases that exceed these loan limits, the borrower would need to apply for a Conventional/Jumbo Loan. Since there is no private mortgage insurance (PMI) on Jumbo Loans, they tend to require stricter credit and income requirements and a larger down payments. An alternative which prudent high price home buyers may choose is to do a 1st – 2nd mortgage combination. This will allow the buyer to take advantage of the lower conforming interest rates. The risk to the buyer may be that the 2nd mortgage may have an adjustable or variable rate which could go up over time. You will want to speak to your professional mortgage banker about the best options for your unique circumstances.
Purchasing a multi-unit property is an excellent way for a homeowner to defer or even eliminate their mortgage payment by living in one unit and renting out the remaining. The homeowner must intend to reside in one of the units for a minimum of 2 years.
Conventional (or conforming) loans and Jumbo Loans allow the borrower the most amount of options when it comes to fixed or variable rate programs. The borrower can choose a 30 year fixed rate, 15 year fixed rate or one of several shorter term fixed rate periods. These may be 7 year fixed, 5 year fixed or 3 year fixed. These shorter term fixed rates can also be amortized over 10 years, 15 years, 20 years or 30 years. These shorter term programs allow a borrower who may not intend to live in a property for an extended period the option of reducing their interest expense based on the shorter time they need the mortgage.
IMPORTANT NOTE: A homebuyer utilizing a conforming loan product will be limited by the seller’s ability to only pay up to 3% of the sales prices towards the buyers closing costs, pre-paid items such as tax and insurance escrows and title insurance. However, if the home buyer is putting down 10% or more the seller could pay up to 6% concessions towards the buyer’s closing costs and pre-paid items such as taxes, and insurances. A buyer must take this into account when determining if they will have enough funds to close the transaction when coupling their down payment and closing expenses.
These loans tend to be written by local banks and direct mortgage lenders. Since most banks charge an application fee to even determine if a borrower qualifies for these programs, we recommend a direct lender who never charges our clients upfront fees!
My husband and I purchased our dream home in April 2015. Prior to buying our home, we searched and worked with few real estate agents. Finally our headache was over!!! We meet with Brandon and just by talking to him we felt confident in him. He is very professional and knows his work. He is very prompt and very helpful. My husband and I highly recommend him. He made sure that we were in our dream home as promised. Brandon takes care of his clients. Becoming a homeowner has been the best thing we…
I didn’t have the best experience with the Realtor who sold me my house. So, naturally I was a bit skeptical when Derek and Jay from Smart Move told me that they could get my house sold for less commission than other agents were telling me that they would charge me. Well, they didn’t just get my home sold quickly and for a great price, their knowledge and experience kept me from making a mistake that could have cost me tens of thousands of dollars. I am so thankful I decided to allow them …
Brandon is seriously the best real estate agent out there! He literally walked us through every detail of the process and he is so easy to communicate with! He gets back to you ASAP and he exceeded all of our expectations for an agent! I would highly recommend him to anyone!
Working with Smart Move Real Estate and Jay Johnson was an absolute pleasure. They not only got my home sold for top dollar, they also saved me a lot of money in the process. Jay went above and beyond to educate and assure me throughout the process. There is no other Realtor that I would even consider referring to my friends and family!
Brandon was very helpful and knowldgeable. My wife and I were new to the area and looking for our first house Brandon was willing to work with us around my work schedule and was very kind in allowing our young son to come along on house searches and helping to keep him entertained as well .
I am almost 60 years young and have needed to depend on realtors about 5 times in my life, either with buying new property or selling old. Derek was the very first that came with no irritation, or that feeling that I can’t wait to never see this person once the deal is done! With changes in life through new housing being hard enough, Derek Overstreet will become a family friend, due to his professional and trusting guidance as your realtor.
Derek was always ready to meet me and show homes when it was convenient to me. When he understood what was most important to me in a home, he would diligently research new listings and send them to me. He worked for me a few months prior to my move from Colorado, never forgetting to keep me informed.
Brandon was very helpful during my home search. He was quite resourceful and responsive. I would highly recommend him if you’re looking to purchase or sale your home.
Derek is a great guy! It’s been months since we bought our home and I can still call him if I have any questions. If I ever buy another house it will definitely be with him.
Brandon did a great job selling our home. He was always available and kept us informed during the process. Brandon is very knowledgeable and more importantly he is honest. I highly recommend Brandon to anyone looking to buy or sell a home.