For many, buying a home feels like a long-awaited investment that marks a pivotal milestone in financial history. As you embark on your home-buying process, you should prioritize your family’s safety and comfort. However, with remote work on the rise, it may be worth splurging on a home where you achieve optimal work-life balance with gourmet meals n a state-of-the-art kitchen or a movie theatre experience just down the hall.
On the hunt for a high-ticket luxury home? If so, rest assured that a luxury home will satisfy all of your needs for extra space and high-tech amenities, allowing you to lead lavish life a standard-family home simply can’t provide.
However, before jumping into this investment, it’s essential to know that buying just any home with a flash price tag doesn’t automatically mean you’re buying a luxury home. At their core, luxury homes are first-of-their-kind, customizable homes that feature over-the-top amenities exclusive to the outside world into your own personalized, private space, like a gym or a spa.
If you’re interested in making this investment, it may be time to talk to an expert real estate agent and your financial advisors about your budget and mortgage options to fund the purchase of your dream home.
Scour the market for a jumbo loan lender
Finding a jumbo loan lender can be difficult. Lenders tend to shy away from taking on these higher-risk loans for fear of having to shoulder the loans themselves, and finding a private investor willing to buy them is not an easy task. However, you still have options despite the shaky market. Consider partnering with a lender that streamlines their operations with loan servicing software. Not only will you be able to obtain a loan more quickly, but you can be sure that you’ll be receiving accurate financial information, and your lender’s software will protect your sensitive data. You’ll also never have to worry about misplacing vital documents with a lender’s software allowing for a paperless, 100% digitized process.
Qualify for a jumbo loan
Considering the increased risk, qualifying for a jumbo loan means jumping through hoops that don’t appear in the context of a conventional conforming loan. On a base level, your credit score should be stellar, at least above a 700. Additionally, your down payment might be much larger than a conventional loan. Typically, a 20% down payment is necessary to obtain a jumbo loan, though some lenders may require as low as a 10% down payment. However, to qualify for a lower down payment, you’ll need to prove your financial reliability with an above-average credit score, a higher income, or significant reserve assets.
Aiming for a low debt-to-income ratio can also better your chances of receiving a jumbo loan. The ideal candidate for a jumbo loan will have all of these qualifications. Keep in mind that jumbo loans are not for people who cannot afford to pay off their debts but for those who are financially stable and can afford to indulge in a luxury property.
Understand what you’re paying for
When seeking a jumbo loan, it’s necessary to understand a few things before you finish signing your paperwork. Traditionally, jumbo loans have a higher interest rate than conforming loans due to their higher risk. You may end up paying more interest with a jumbo loan as compared to someone with a smaller loan and a higher interest rate.
Similar to any other mortgage, jumbo loans will also feature closing costs, including the possibility of higher appraisal fees and a requirement of more than one appraisal to secure a loan. For additional security, some lenders may mandate mortgage insurance in addition to these other charges.
Fortunately, a mortgage broker can help you understand various fees and rates for jumbo loans, in addition to helping you negotiate. Regardless of how you go about the process, before buying your home and securing a jumbo loan, it’s crucial to consider these additional costs and whether you’re financially secure enough to shoulder them.
The bottom line
Obtaining a jumbo loan to purchase a luxury home requires research and time. Knowing all of your options and understanding jumbo mortgages’ adjoining costs is essential before you pull the trigger. However, while the search process can be arduous and complicated, the payoff of owning your dream home at the end of it all will be well worth it.