Is It the Right Time to Refinance a Jumbo Loan

Are you interested in purchasing high-value homes?

If yes, you will need higher mortgages that exceed the conforming loan limit. When it comes time to refinance your mortgage, you may want to consider refinancing your jumbo loan.

Jumbo loans can help you in purchasing a high-value home. Jumbo loans are mortgages above the conforming loan limit set by Fannie Mae and Freddie Mac which is $484,350 in most parts of the country. This means that if you have a larger mortgage than this amount, it will be considered a jumbo loan.

The Jumbo loan limit in Florida depends on the average home costs and is becoming more popular as the housing market has recovered and home prices have increased.

Requirements to Refinance a Jumbo Loan

Unlike other traditional finances, jumbo loans have no government backing. This means that the risk is borne by the lender alone. So, all mortgage lenders are not willing to refinance a jumbo loan. In addition, jumbo loans are challenging and difficult to qualify for. Florida Mortgage Company has stricter requirements, more documentation, and a secured financial status to qualify for refinancing jumbo loans in Florida. However, if you meet the requirements, jumbo refinancing can be a great way to save money on your mortgage.

So if you’re considering refinancing your jumbo loan to get lower interest rates, you will need to meet the following requirements.

Credit Score: A credit score of 680 or higher is required to qualify for a jumbo loan refinancing. A higher credit score shows that the borrower is reliable to pay off the loan.

Income: A stable and consistent income flow is required to qualify for a jumbo mortgage refinance.

Debt-to-Income Ratio: A higher DTI shows that the borrower does not have an emergency fund. Your DTI should be below 43% to qualify for a jumbo loan refinancing.

Property: The property you are refinancing should be worth at least $500,000.

Loan-to-Value Ratio: The LTV should be below 80% to qualify for a jumbo mortgage refinance.

Cash Reserves: Lenders want to see that you have some cash reserves to cover any potential emergencies. You should have at least six months of mortgage payments to qualify for a jumbo loan refinancing.

Documents Required to Refinance a Jumbo Loan

To document your income, assets, and DTI ratio for a jumbo loan, you need the following documents:

• Two years of W-2s
• Two most recent pay stubs
• Two years of tax returns.
• Bank statements for the last six months
• Investment account statements for the previous three months
• Retirement account statements for the last three months
• Most recent credit report
• Mortgage statement
• Credit card statements for the last three months
• Student loan or car loan statements for the previous three months

If you’re self-employed or in a partnership, you will need to provide:

• A copy of your business license,
• A recent Profit and Loss statement
• A current Balance sheet

The documentation required for a jumbo loan refinancing can be daunting, but it’s essential to have all your documents ready to speed up the process.

Benefits of refinancing a Jumbo Loan

Despite the stricter requirements, a jumbo loan refinancing can offer the following benefits:

• Get a lower interest rate.
• You can shorten the term of your loan, which will result in a lower monthly payment.
• You can borrow more money if you need to make home improvements or pay off debt.
• Consolidate your debt into one monthly payment.
• You can lower your monthly payments and save money on interest.
• Take cash out of your home to cover any costs associated with purchasing a high-value home.

Factors to Consider

It would help to consider a few factors before refinancing your jumbo loan.

• The current refinancing rate in Florida: Interest rates have been rising recently, so you may not get as low a rate as you did when you first took out your loan.
• The fees associated with refinancing: There are closing costs associated with refinancing. Closing costs are higher on jumbo loan refinances, about 3% to 6% of your total loan amount.
• How long you plan to stay in your home: If you plan on selling your house shortly, refinancing may not be worth the hassle.
• Your credit score: Your credit score will be rechecked when you apply for a jumbo loan refinancing, so make sure it’s still in good standing.
• Bankruptcy: If you’ve filed for bankruptcy in the last two years, you will not be able to qualify for a jumbo loan refinancing. You may have to wait for at least seven years after your bankruptcy has been discharged.

Time Required to Refinance a Jumbo Loan

It takes longer to refinance a jumbo loan than other conventional mortgages as it has to go through a manual underwriting process before approval. A financial expert personally verifies all documents rather than using underwriting software. Also, if your credit report shows some negativity or you lack reserves, then the lender will wait until these red flags are cleared.

If you meet all of the lender’s requirements and are confident that refinancing is the right choice for you, it typically takes 30 to 45 days to go through the entire process. However, keep in mind that this timeline can be sped up or slowed down depending on how quickly you provide the required documentation to your lender. So if you’re thinking about refinancing, check jumbo loan rates in Florida and make sure you have all of your documents ready to go!

Conclusion

Refinancing a jumbo loan can offer many benefits, but it’s essential to weigh the pros and cons before moving forward. By understanding the requirements and what to expect, you can decide whether refinancing is the right choice for you.