Jumbo mortgages are nothing more than mortgages which are above what the current conventional mortgage loan amounts are. Though many homebuyers think their mortgages are jumbo, it is actually a term of art.
When applying for a mortgage that are beyond the limits of Fannie Mae (FNMA) and Freddie Mac (FHLMC) it is considered a jumbo mortgage (presently that means the mortgage is in excess of $729,000).
The two large agencies, FNMA and FHLMC purchase the largest bulk of residential mortgages in the country and they sit the limit on the size of the mortgage they would buy - these are considered conventional mortgages. Those mortgages in excess are given the term jumbo mortgages.
Buyers who are taking out a large mortgage should be aware of this as there may be some changes in the interest rates, etc., however all of that will be disclosed by your loan officer. It is perfectly acceptable to ask him or her what, if any, impact would be if you are getting jumbo mortgage.
Jumbo mortgages are becoming increasingly more popular as home prices continue to soar. It is important to find out the current limit to conventional mortgages as that amount does change, therefore changing the parameters of what are and what are not jumbo mortgages.
As with all aspects of the mortgage process, it is always a good idea to ask many questions, read as much information as you can find and be as educated as possible. An educated consumer is a good consumer and that includes finding out everything you can about mortgages and jumbo mortgages.
