Should I Get a Fixed Rate Or an Adjustable Rate on My Jumbo Home Mortg…

Jumbo mortgage loans are similar to regular mortgage loans; the big difference is that the loan exceeds the limits that have been set by Fannie Mae and Freddie Mac.  Any mortgage loan that is more then $417,000 is considered to be a Jumbo mortgage loan. This amount is determined by comparing industry standards of the average home loans from the largest secondary mortgage lenders, Fannie Mae and Freddie Mac.

These companies are the ones that set the cap or dollar amount limit for loans that they will finance. If the loan exceeds this amount they are funded by other lenders such as edges and insurance companies. In most US states this limit is $417,000; however, the cap will vary depending on your location. For example limits are higher in Alaska and Hawaii.

Jumbo loans have terms very similar to regular loans. They can choose to have a variable rate, like 3/1 or 5/1 with a fifteen to thirty year loan. They can also choose to have a fixed rate mortgage loan for fifteen or thirty years. It will depend on your situation and plans whether you choose a variable or fixed rate Jumbo mortgage.

For those who are planning to reside in their new home for many long years, you would assistance most from a thirty year fixed mortgage.  The rates on this kind of mortgage will never go up or down; they will keep the same for the complete life of your mortgage. The reason that this is so important to some borrowers is that you will always have a predictable payment. There will never be sharp hikes in your payments. The bad side is simply that you are charged more up front with a fixed rate opposed to a variable rate because the lender can never charge you anymore.

If you want a low Jumbo mortgage rate you should go with a variable rate loan. Usually the lowest Jumbo loans are variable rates. The reason that variable loans are the lowest is because lenders know that they stand to assistance from increase in rates over time. This is why they are more willing to give you a lower rate to begin with. The downside is that after having those low rates for three to five years they will adjust every year. already the tiniest rise in rates can have a meaningful affect on your mortgage payments.

It is more advantageous to take out a variable rate Jumbo mortgage if you plan to move within a few years of buy.  This allows for them to have lower initial payments. If you plan to refinance in the near future the thirty year variable rate will assistance much more then a fixed rate. There is no reason to pay a higher fixed rate if your long term plans dont include keeping the home. Always be careful though. No one knows what the future may bring and when you get into something this big make sure you can truly manager the load.

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