Jumbo Loans Support Higher Priced Home Purchases

With the average home sale price in the Denver Metro area hitting $487,974 in April 2017 and expected to continue rising, access to “jumbo loans” is becoming increasingly important. For most parts of the United States, a jumbo loan is a mortgage loan above $424,100. In Colorado, however, some counties have a higher loan limit. For exact information, please see Conforming Loan Limits from the Federal Housing Finance Agency.

On Tap Credit Union’s jumbo loan product allows borrowers to access up to 90 percent of the loan-to-value of the home being purchased, for well qualified buyers. This means that some borrowers will only need 10 percent of the home’s purchase price or value (whichever is less) as a down payment, with no mortgage insurance required; traditional mortgages require mortgage insurance for less than a 20 percent down payment.

We also enable borrowers to access a significant sum – up to $700,000 – at an attractive interest rate that is lower than traditional fixed rate loan products. Our product is a 5/1 Adjustable Rate Mortgage (ARM), meaning that the interest rate is fixed for the first five years, and then may be adjusted annually based on the index it is tied to (in most cases, one year treasury) plus a margin. For example, if the one-year Treasury rate were 1.753, and your loan has a 2 percent margin, the jumbo mortgage rate would be 3.753 percent. There are caps on how much your interest rate can adjust each period in addition to a lifetime maximum cap.

With an ARM such as On Tap Credit Union’s jumbo loan product, there is the risk of increasing interest costs. We offer several ways to protect against these risks: borrowers can apply for a refinance at any time if they wish to convert to a fixed rate mortgage at the then-current interest rate; they can make extra payments to pay the loan off more quickly; and they can pay off the loan at any time, including through refinancing, with no prepayment penalty.

Applying for a jumbo loan follows the same process as any other mortgage, and requires the same documentation. As with all our home loans, our dedicated and experienced home loan consultants are available to support you through the application and closing process.

Jumbo loans have been around for a while, but today’s rising home prices mean more people need to access them. On Tap Credit Union has developed our jumbo loan product to help our members buy the homes of their dreams in any market environment. For more information, contact one of home loan consultants today.