Comparing Colorado Jumbo and Conforming Mortgages

There are differences between a jumbo Colorado mortgage and a conforming Colorado mortgage and learning what those are will inform you about which Denver mortgage is the best for you. Information about your mortgage will help you as a customer, so you will be able to work out a fair deal with a lender when you are in the market for a Denver mortgage.

Jumbo & Conforming Colorado Mortgages Defined

There are two companies, named Fannie Mae and Freddie Mac that are empowered by the government to buy mortgages. Because of how they were created, Freddie Mac and Fannie Mae make the standards for the mortgage business. So they have decided what makes a conforming loan and what makes a jumbo loan.

The difference between a conforming loan and a jumbo loan is the size of the loan you are looking for. A conforming loan is the smaller of the two. The most expensive loans are called jumbo mortgages.

The boundary between the two different kinds of loans moves from year to year and stems from the mortgage and housing market. The line now for a Denver mortgage and Colorado mortgage to be considered a conforming loan is a price of less than $417,000 for a single family house with a first mortgage and an amount of $208,500 for a second mortgage. Multi-family properties will have higher limits. Any amount above this is officially a jumbo Colorado mortgage. The limit will be different in states outside of Colorado, but these amounts cover all of the state. There will be a change to the limits to Denver and Colorado mortgages because of the stimulus package.

All About Colorado Jumbo Loans

The amount of the loan is the key factor in determining if a Denver mortgages is a jumbo loan. The jumbo mortgage products in Colorado are otherwise just the same as a conforming loan. The loan terms can be changed in many different ways, including fixed rates, adjustable rates, and interest-only programs. All of it will depend on which program you sign up for when getting a Colorado jumbo mortgage loan from a lender

Don’t forget that since the market is so small for jumbo mortgages there will be a tighter rein on the qualifications. This is true of Colorado mortgages as well. Since the borrower is taking out such a large sum, they will have to meet such strict standards such as a higher credit score and lower loan to value ratios.

When you look at the price and the loan amount of the house you are interested in, you will be able to see whether or not you need a jumbo Denver mortgage or a conforming Colorado mortgage. When you know what type of loan you need, you then find a mortgage lender in Colorado who can work with you. As always, it’s best to work with a Denver mortgage lender who has experience making customers happy with their loan selections. The lender will work with you on finding the right home loan option, whether it is a conforming mortgage or a jumbo Colorado mortgage. In the end, you will be connected with the best product for you.

This article is written by J.B. of 1st American Mortgage and Loan, LLC, a Colorado mortgage lender who offers access to information on obtaining a Colorado mortgage loan as well as other information on loans inColorado online mortgage quotes, and rates through his website TrueMortgageQuote.com http://www.truemortgagequote.com).



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With housing prices stalled, or even having falling in some local markets, Canadian home owners seeking mortgage refinancing and who are looking at a high ratio mortgage – i.e., home owners who are refinancing a mortgage where the mortgage exceeds 80% of a home’s current market value, or those looking at a second mortgage but who lack the requisite 20% down payment – need not be discouraged. Mortgage loan insurance is available, and affordable, commercially through the Canadian Mortgage and Housing Corporation (CMHC), a federal crown corporation, or through private mortgage loan insurers such as Genworth Financial Canada.

Most federally regulated lending institutions in Canada – the banks, credit unions and caisses populaires that compete for the bulk of the Canadian mortgages market – are prohibited by regulations under the Canadian Bank Act from providing mortgages without mortgage loan insurance for amounts that exceed 80% of the value of the home or property purchases with less than a 20% down payment.

Homeowners who initially started out with a high ratio mortgage, or whose home equity is flirting with the 20% equity ratio under the Bank Act can readily access affordable mortgage loan insurance for high ratio mortgages. The CMHC explains that “mortgage loan insurance helps protects lenders against mortgage default, and enables consumers to purchase homes with little or no downpayment – with interest rates comparable to those with a 20% downpayment.” Similarly, mortgage insurance is available for high ratio second mortgages where home owners do not meet the 20% equity threshold and need financing but are unwilling or unable to renegotiate their first mortgage because the interest rate on their first mortgage loan is significantly lower than current interest rates, termination penalties are too high, or they would not re-qualify for the same mortgage amount today.

As with any other form of insurance, there are insurance premiums to be paid, although they need not be prohibitive nor unduly expensive. Insurance premiums for high ratio mortgage loans vary and can range between 0.65% and 2.75% depending upon how much of the home’s value is to be financed.

The structure and costs of a high ratio mortgage will, of course, vary between lenders, as will the price and coverage for mortgage loan insurance. The best step for a homeowner who is looking at his or her refinancing options and is at or past the cusp where mandatory mortgage insurance coverage kicks in, is to comparison shop with the assistance of an experienced mortgage broker. The options that are available when looking at refinancing a high ratio mortgage or financing a high ratio second mortgage can vary significantly between lenders and insurers.

Some options that are available to qualifying home owners who are looking at a high ratio second mortgage include:

- High Ratio, equity based 2nd mortgages up to 85%

- Insured second mortgages that are typically available for up to 95% of the property value;

- High-ratio second mortgages that are usually available for up to 100% of the property value, albeit with limited fees;

- Open 2nd mortgages and Lines of Credit typically available for up to 90% of the property value;

- Mortgage amortizations of up to 35 years, or interest only mortgages; and

- Loan terms ranging from 1 – 5 years.

Those homeowners who are looking at refinancing and are faced with the prospects of refinancing with high ratio mortgages, or who may be seeking second mortgage financing in order to avoid the real and hidden costs of refinancing their first mortgage, should seek the services of an accredited Canadian mortgage broker so that they can investigate the full range of mortgage and insurance options that are available to them.



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