Fixed-Jumbo Loan Refinancing: What to Know

Fixed-Jumbo Loan Refinancing: What to Know

Jumbo loan refinancing can be an effective way to change your terms or use your home equity. This program is ideal if your new mortgage exceeds conforming loan limits. Learn more below. 

Fixed-Jumbo Loan Refinancing: What to Know

What Is Jumbo Loan Refinancing?

Jumbo loan refinancing is used when the amount needed is more than what conventional limits allow. This program:

Exceeds Fannie Mae and Freddie Mac limits

Jumbo loan refinancing allows qualified homeowners to replace their existing mortgage with a new one that exceeds conforming loan limits established by the Federal Housing Finance Agency.

Has no restrictions on property type

Borrowers can choose between conforming loans, jumbo loans, government-backed loans, and more to fit the Jumbo loan refinancing can be used for single-family homes, primary residences, multi-family properties, condos, second homes, vacation homes, and other investment properties financial circumstances

Allows for cash-out refinancing

High-value property owners can use cash-out jumbo loan refinancing to access their home equity. This means you take out a mortgage for more than what you owe and get the difference in cash.

What Can Jumbo Loan Refinancing Be Used For?

Luxury homes

Jumbo loan refinancing is often used to refinance high-value homes that exceed conventional loan limits. Homeowners can also use it for cash-out refinancing if their property is within limits, but they want to borrow more.

Vacation homes

If you own a high-value vacation home or one in a competitive area, you may need a jumbo loan to refinance. Doing so can help you leverage your home equity or change your mortgage terms.

Investment properties

Upscale rental units and multi-family properties can also be refinanced with a jumbo loan. This is ideal for investors who want to restructure their payment terms or tap into equity to invest in another property.

NYFTY Lending Loan Pros

Pros

  • Higher loan amounts than conventional refinancing
  • Fewer restrictions on property types
  • No need for multiple smaller loans
  • Interest may be tax deductible
NYFTY Lending Loan Cons

Cons

  • Stricter qualification requirements
  • Larger down payment required
  • Typically has higher closing costs

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Alternatives to a Refinancing with a Jumbo Loan

Home Equity Lines of Credit (HELOCs)

  • Borrow against your home equity without refinancing your primary mortgage
  • Offers flexible use of funds for various purposes
  • Leaves your primary loan terms unchanged
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Cash-Out Refinancing

  • Replaces your current mortgage with a larger one
  • You get the difference between your loan balance and the new mortgage in cash
  • Like HELOCs, the money can be used for nearly anything
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Reverse Mortgages

  • Available to borrowers 55+
  • Loan amounts up to $4 million
  • Borrow against the value of your home without monthly payments
  • Payments are deferred until the home is sold or no longer occupied
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How Do I Know If Refinancing with a Jumbo Loan Is Right for Me?

You own a high-value property

Refinancing your home with a jumbo loan is ideal if your property value exceeds the conforming loan limits set by Fannie Mae and Freddie Mac.

You have a strong credit profile 

Jumbo loans typically require borrowers to have excellent credit, a low debt-to-income ratio, and significant cash reserves. If this applies to you, refinancing can maximize the value of your large investment.

You need a lump sum of money for a large expense

If you have a large expense that you need a lump sum of money for, jumbo cash-out refinancing may be an ideal solution and can offer more attractive repayment terms compared to other programs. 

When Is the Best Time to Use Jumbo Loan Refinancing?

The best time to refinance a jumbo loan is during a pivotal stage in your life when you’ve paid off a significant portion of your mortgage and built substantial equity in your home. This might be after years of steady payments, when you’re looking to access funds for major life events like sending a child to college, starting a business, or planning a long-awaited renovation.

While it’s possible to refinance earlier than this, the amount of equity you’ve accrued plays a critical role in determining the loan amount and terms you qualify for. The more equity you have, the more you can borrow to support the next big chapter in your life.

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FAQ

Refinancing a jumbo loan can be more complex than a traditional mortgage and may require additional documentation. NYFTY Lending can help walk you through each step of the process, so everything goes as smoothly as possible.
Reserves are liquid or semi-liquid assets, like checking/savings accounts, money market funds, or certain investment accounts. These reserves are expressed in terms of months of mortgage payments, which includes principal, interest, taxes, and insurance (PITI). Jumbo loan borrowers may be required to show sufficient reserves to cover 6 to 18 months of mortgage payments, though the exact figure can vary.
Just like conventional mortgages, you can refinance your jumbo loan multiple times when it makes financial sense to do so. That said, you may need to wait for a certain period of time after closing before another refinance will be allowed. You should also check if there are any prepayment penalties if you’re refinancing a non-conforming jumbo loan. 
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