What They Are and Why You Might Need One
Even with the recent downturn in the real estate market, homes in many major metropolitan areas still often exceed half a million dollars. At $550,000, even a 20% down payment means that your mortgage will exceed the current conventional loan limit of $417,000. Unless you can afford to put a lot more money down on your new home purchase—and this can be tough for dads—you are likely going to need a jumbo mortgage loan.
Simply put, a jumbo mortgage is any mortgage loan over $417,000 in value. Because of the larger size of jumbo loans, they do carry a higher interest rate than smaller conventional loans – generally .25% to 1% higher. While this isn’t a huge difference, it will increase your monthly payment. For dads managing family finances, this can be another thing to consider when planning your budget.
Unfortunately, if the house you want costs enough, you can’t choose whether to use a jumbo mortgage or not. If your loan is over the $417,000 limit, it’s a jumbo mortgage or nothing unless you can find a completely private source of financing. And given the relatively low limit on conventional loans imposed by Fannie Mae and Freddie Mac, even a solidly middle-class home can require a jumbo mortgage. Loans like this are not just for luxury home buyers anymore.
While buying a new home is often stressful even at the best of times for the busy family man, homeownership for dads can be an extremely rewarding experience. Providing your family with a stable home that is truly theirs can bring financial and psychological benefits to fathers, children, and partners alike. If it’s within your budget, don’t run away from a jumbo loan. Take it as a sign that you’ve reached a position where you can give your family the wonderful home they deserve.