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.
What Is Jumbo Loan Refinancing?
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.
Pros
- Higher loan amounts than conventional refinancing
- Fewer restrictions on property types
- No need for multiple smaller loans
- Interest may be tax deductible
Cons
- Stricter qualification requirements
- Larger down payment required
- Typically has higher closing costs
Talk to our mortgage experts today about finding the right loan for you.
Alternatives to a Refinancing with a Jumbo Loan
- Borrow against your home equity without refinancing your primary mortgage
- Offers flexible use of funds for various purposes
- Leaves your primary loan terms unchanged
- 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
- 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
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
Is it difficult to refinance a home with a jumbo loan?
What are reserve requirements for a jumbo loan?
Can I refinance a jumbo loan more than once?
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