Wichita Jumbo Loans: What are the Options?

Jumbo loans are mortgage loans that exceed the conforming loan limits set by the Federal Housing Finance Agency (FHFA). These loans are also known as non-conforming loans because they do not conform to the guidelines set by government-sponsored enterprises (GSEs) such as Fannie Mae and Freddie Mac.

Conforming loans are mortgage loans that meet the guidelines set by the GSEs and are eligible to be purchased by these enterprises. The conforming loan limits are based on median home prices in a given area and are adjusted annually. In 2021, the conforming loan limit for a single-family home was $548,250. Any loan amount above this limit is considered a jumbo loan.

Jumbo loans can be used to finance the purchase of a home (conventional), build a home (construction), or renovate a home (renovation), but they may also be used to refinance an existing mortgage or to take out a second mortgage. Jumbo loans are typically available from banks, credit unions, and other financial institutions, and they may be fixed-rate or adjustable-rate mortgages.

What are the Pros and Cons?

There are a few pros to jumbo loans:

1. Higher loan limits: Jumbo loans allow borrowers to borrow larger amounts, which may be necessary for high-priced homes. This can be especially useful in areas with high real estate values.
2. More flexible underwriting guidelines: Since jumbo loans are not backed by the GSEs, lenders may have more flexibility in their underwriting guidelines. This can be beneficial for borrowers who may not qualify for a conforming loan due to certain circumstances such as self-employment or a lack of a traditional credit history.
3. No mortgage insurance: Jumbo loans do not require mortgage insurance, which can save borrowers money on monthly payments.

There are also some cons to jumbo loans:

1. Higher interest rates: Jumbo loans typically come with higher interest rates than conforming loans, which can increase the overall cost of borrowing.
2. Limited availability: Not all lenders offer jumbo loans, and those that do may have stricter underwriting guidelines. This can make it harder for borrowers to find a lender willing to provide a jumbo loan.
3. Limited financing options: Jumbo loans may not be eligible for certain government programs, such as the Federal Housing Administration (FHA) or Department of Veterans Affairs (VA) loan programs, which can limit financing options for borrowers.

Already have a house but want to renovate?

A jumbo renovation loan is a mortgage loan specifically designed to finance home renovations or improvements. These loans may have higher loan limits than traditional mortgage loans, allowing borrowers to borrow more money to cover the cost of renovations.

There are a few key differences between jumbo conventional loans and jumbo renovation loans:

1. Purpose: A jumbo conventional loan is used to finance the purchase of a home, while a jumbo renovation loan is used to finance renovations or improvements to an existing home.
2. Loan limits: Jumbo conventional loans have higher loan limits than traditional mortgage loans, while jumbo renovation loans may have even higher loan limits to cover the cost of renovations.
3. Use of funds: With a jumbo conventional loan, the borrowed funds are used to purchase a home. With a jumbo renovation loan, the borrowed funds are used specifically for renovations or improvements to an existing home.
4. Repayment terms: Both jumbo conventional loans and jumbo renovation loans may have different repayment terms and interest rates depending on the lender and the borrower’s financial situation.

What if I don’t have a house but want to build/remodel one?

A jumbo construction loan is a type of loan used to finance the construction of a new home or the significant renovation of an existing home. These loans may also have higher loan limits than traditional mortgage loans to cover the cost of construction or renovations.

There are a few key differences between jumbo renovation loans and jumbo construction loans:

1. Purpose: A jumbo renovation loan is used to finance renovations or improvements to an existing home, while a jumbo construction loan is used to finance the construction of a new home or the significant renovation of an existing home.
2. Loan limits: Both jumbo renovation loans and jumbo construction loans may have higher loan limits than traditional mortgage loans to cover the cost of renovations or construction. However, jumbo construction loans may have even higher loan limits due to the higher cost of building a new home.
3. Use of funds: With a jumbo renovation loan, the borrowed funds are used specifically for renovations or improvements to an existing home. With a jumbo construction loan, the borrowed funds are used to finance the construction of a new home or the significant renovation of an existing home.
4. Repayment terms: Both jumbo renovation loans and jumbo construction loans may have different repayment terms and interest rates depending on the lender and the borrower’s financial situation.

Do I qualify for any jumbo loans?

To qualify for a jumbo loan, it’s typically required by lenders to conduct an appraisal of the property to determine its value and the amount of money they are willing to lend. The appraisal requirements for a jumbo loan may vary depending on the lender and the borrower’s financial situation. Typically, a licensed appraiser inspects the property and provides an estimate of its value based on factors such as its location, condition, and features.

For a jumbo loan, lenders may require a more thorough appraisal process to ensure that the property is worth the amount being borrowed. This may include a more detailed inspection of the property and a review of comparable sales in the area. Lenders may also require additional documentation, such as proof of repairs or renovations, in order to determine the value of the property.

What do jumbo loans look like in Wichita?

It is important to note that the conforming loan limits are based on median home prices in a given area and are adjusted annually. Therefore, the conforming loan limit for Wichita of $548,250 may be different in future years.

Borrowers in Wichita who are considering a jumbo loan should be aware of the potential pros and cons of these loans. It is always a good idea for borrowers to carefully consider their financial situation and the terms of any mortgage loan before making a decision.

It is also worth noting that the availability and terms of jumbo loans may vary among lenders in Wichita. It may be helpful for borrowers to shop around and compare offers from multiple lenders in order to find the best option for their situation.

Overall, jumbo loans can be a useful option for borrowers who need to borrow a large amount of money, but they may come with higher interest rates and fewer financing options. It is important for borrowers to carefully consider their financial situation and the pros and cons of a jumbo loan before making a decision.

Not sure whether a jumbo loan is the right option for you? Feel free to give us a call at JR Mortgage Group! Our loan officers are ready to help you figure out exactly what’s best for your financial situation.