Luxury home loans, also referred to as jumbo loans, are loans that go beyond the loan limits set by the FHFA or Federal Housing Finance Agency. Because they exceed the amounts set by the federal government, these loans will not be backed by Fannie Mae or Freddie Mac. So, they are different than your average home loan.
As of right now, the conforming limit set by the federal government is $417,000. Even a non-luxury home may go over this amount, especially if the home is located in a high cost market area. Miami does have the majority of their homes under this amount; therefore, if you are purchasing a home over that, you are looking at a jumbo loan-backed purchase.
Jumbo Loans are High Risk
Because jumbo loans are not guaranteed by the government, lenders are taking great risk offering these to consumers. To protect themselves, lenders often have stricter investment requirements for a jumbo loan, such as larger down payments.
To assess the risk of the buyer, these types of loans are manually underwritten and typically go through two sets of appraisals to ensure the homeowner is only financing what the luxury home is worth – and not a penny more.
The credit requirements for a jumbo loan are stricter. Not only will you need excellent credit, but a substantial income proving you can handle the loan payment. You may even need high value assets to back the loan.
You Can’t Get a Jumbo Loan Anywhere
Your neighborhood bank or mortgage broker may not have access to a jumbo loan. Instead, you have to deal with luxury home loan brokers who specialize in these types of loans.
Title Companies Can Help
The purchase of a luxury home should not be handled by just any title company in Miami. The payments, escrow accounts, and even the title insurance on these loans are complicated and require an industry expert.
If you are buying a luxury home in Miami, contact the team at Title Lab today. We understand the complexity of jumbo loans and can help you not only close the deal, but handle all escrow accounts as well. Even with a jumbo loan, it’s important to ensure the closing process goes smoothly and painlessly. Call us today at 305-440-4150 to learn more about our luxury home real estate closings, jumbo loans and how they work, or to schedule your appointment.