JUMBO RATE & TERM REFINANCE
Essential Elements

A Jumbo Rate and Term Refinance Mortgage Loan is designed for homeowners with large, non-conforming loan balances who want to refinance their mortgage’s interest rate or term. This loan is essential for those with high-value properties whose loan amounts exceed the conventional loan limits set by the Federal Housing Finance Agency (FHFA). 

Higher Credit Score(s)
Jumbo loans require strong credit histories, typically with minimum credit scores around 700-720, depending on the lender’s criteria.

Loan Amounts Exceeding Conforming Limits
Unlike conforming loans, jumbo loans are designed for borrowers with larger loan needs. Conforming limits vary by location, but jumbo loans generally start at amounts exceeding $766,500 in most areas and with even higher thresholds in high-cost regions.

Property Valuation
Jumbo refinances require an appraisal to verify the current market value, ensuring that the refinanced loan amount aligns with the property’s value and that there is sufficient equity.

Rate Terms
Jumbo refinance loans are available in both fixed-rate and adjustable-rate mortgage (ARM) terms, although the rates may be slightly higher than conforming loans due to the larger loan size and risk to the lender.

– Borrowers can choose terms ranging from 10 to 30 years.

No Private Mortgage Insurance (PMI) Requirement
Despite the large loan amount, jumbo loans do not require PMI regardless of the loan amount and loan to value.  This can mean significant savings in monthly payments for qualified borrowers.

Higher Closing Costs
Jumbo refinances mortgage loans often have higher closing costs than conforming loans. These costs can include lender origination, appraisal fee,  closing agent, title insurance and recording fees. 

Option to finance fees into the new loan.
In many cases, closing costs can be financed into the new loan amount, although this will vary by lender and may slightly increase monthly payments.

Rate Reduction
A rate and term refinance is focused on reducing the interest rate or modifying the term (e.g., from 30 years to 15 years) to adjust monthly payments without withdrawing cash from home equity. 

Term Reduction or Extension
Borrowers can reduce their term to pay off the mortgage faster, reducing total interest paid, or extend the term to lower monthly payments, depending on financial goals.

Higher Equity Requirements
Lenders usually require borrowers to retain significant equity in the home for a jumbo refinance, typically between 20-30% to attain premium terms. Higher equity reduces the lender’s risk and can help borrowers qualify for lower interest rates.

Appraisal Requirement
A jumbo rate and term refinance will require an appraisal to confirm the property value and verify that equity meets the lender’s requirements.

Is a Jumbo Rate and Term Refinance Right for You?
A Jumbo Rate and Term Refinance can be an excellent option for those with high-balance loans who want to secure a lower interest rate or adjust their loan term. This type of refinance is ideal for borrowers seeking long-term interest savings, reduced monthly payments, or a faster path to loan repayment. However, with higher credit and equity requirements, it’s important for borrowers to ensure they meet the eligibility criteria and fully understand the benefits of refinancing ther current loan into a new jumbo mortgage.