California is a jumbo state, so it is not surprising that jumbo mortgages are important here. In fact, more so than in almost any other state, jumbo mortgages are important in California. Why? In a word…prices. The higher the price for real estate, the more likely that a jumbo loan might be required.
First, what’s the difference between a jumbo home loan and a conventional mortgage. A conventional mortgage fits within the conforming loan limits established by Fanny Mae and Freddie Mac. For the tenth year in a row, that limit is $417,000 for a single-family dwelling and $800,000 for a four-unit property, such as a double duplex.
These limits cover both new home mortgages and refinance loans. By “limits”, we mean that this is the maximum that a person can borrow against the property under the terms of a conventional mortgage.
Not all loans have to conform to Fanny Mae’s and Freddie Mac’s limits, and that’s where it gets complicated. We won’t go into all the divergences in this article, but we will look at one: geography.
The FHA has designated 46 counties for higher loan limits. The $417,000 might be a piece of cake in Nebraska – did you know there are counties with a median home value as low as $39,000? – but that does not work as well in a town like Bradbury, CA, where the median price is over $1,300,000.
Nevertheless, the FHA has announced loan limit increases for 46 counties, including four in California.
- Monterey County, CA, loan limit: $502,550
- San Diego County, CA, loan limit: $562,350
- Ventura County, CA, loan limit: $603,750
- Napa County, CA, loan limit: $615,250
If this seems strange, that these are not the counties with the highest home prices, you are correct. In fact, the highest-priced zip code in California is Atherton in Silicon Valley’s San Mateo County. The second most expensive zip code is Beverly Hills, in Los Angeles County. The third most expensive zip code is in Santa Monica, also in Los Angeles County, followed by Palo Alto in Silicon Valley’s Santa Clara County.
These four zip codes are the second to fifth most expensive zip codes in the entire nation in which to by property. They are in Los Angeles and Silicon Valley, and none of those counties qualify for a higher loan borrowing limit.
The next most costly zip codes in California are found in Newport Beach, Orange County, then two more in Silicon Valley, one in San Matteo County and one in Santa Clara County. California’s eighth most expensive zip code is in Santa Barbara in Santa Barbara County. Only after that do we come to a zip code in San Diego County, one of the four counties with higher loan limits.
So we have a whole lot of very expensive property in California, and we have fairly tightly controlled loan limits for conventional mortgages. That is why jumbo mortgages are so important in California.
Of course, if you are moving from Newport Beach to Palo Alto, it might not be a big deal. After all, you’ll be selling some pretty expensive property and using that collateral as a down payment.
But if you are moving from Iowa or Arkansas or northern Michigan, or a county in Nebraska where the median home price is $39,000, it will take a huge mortgage to move from your old upper-middle-class house to a new one in Silicon Valley or anywhere within spitting distance of Los Angeles.
If you need a jumbo mortgage anywhere in California, Florida, or Georgia, we’ll be happy to arrange it. We’ll make sure you qualify and we’ll hunt down the best rate available from all the banks, trust companies, and private sources we have access to in our ever-growing network. “Jumbo” should refer to the size of the mortgage only – not to the interest rate you have to pay.
The Way To Refinance in California
For people who live in California may find it is rather convenient for them to go out and get a refinance deal. However, one must keep in mind that if you getting a wrong loan even with the best rate, it is going to cost you even more for a good rate on the right loan.
Options for Refinance in California
There are many refinance options you can find in California and there are many reasons why you need to refinance considering the existing economy in the market today.
1. Build Equity Faster
You may wonder whether you want to save or to prepay. If you want to obtain the most from your loan, what you may do is you should adjust the way you pay your loan.
You may go get an Equity Reposition Report and seek consultation from mortgage consultants where they will be able to show you how your money works. Almost in all cases, money in the bank tends to grow faster compare to extra principal payments.
2. Improve in Your Credit Score
Should your credit score has improved resulting from pay off your mortgage loans in full when they are due or reducing your debt, you most likely are now able to reap the benefits of your improved credit score.
You may as well check with the mortgage consultant to review your existing credit score, your current mortgage terms, and employ a Total Cost Analysis to find the loan that best suits you.
3. Lower Your Rate of Interest
Getting a lower interest rate is among the main reasons why people want to refinance. If you decided to refinance, you have to make sure that the loan you end up picking is the best loan that can benefit you the most.
You should know that a loan can be considered as just the interest rate since a loan with bad terms, in the long run, will make you pay for more.
4. Getting Debt Consolidation Loan to Combine Your Mortgages
Nowadays, it is rather common for people to use their line of credit and then combine two or more loans into a single loan at an overall lower monthly payment which is known as a debt consolidation loan.
5. Make Use Of The Equity You Established
A cash-out refinance lets you take advantage of the equity you have established on your property. You should completely pay down revolving credit card debts, renovate your home, send your kid to college, use for personal expenses or carry out your retirement goals by starting a pension account for taking care of your future.
6. Achieving Your Financial Goals
It’s going to be essential for you to understand the benefits of the refinance as well as how many years you intend to stay in your house. Your financial goals will be incredibly important since your mortgage loan must match your general financial requirement.
7. Change Your Mortgage Loan Program
A lot of householders who commence with variable rate mortgage would like to change to a fixed-rate mortgage after a few years. You may have pay for a fixed-rate mortgage all the while and now are considering shifting to variable rate mortgage next year. The market rate keeps changing over time and nobody would want to pay more for their mortgage.
Getting Success For Refinance in California
As long as you can meet all the requirements, you are able to have your remortgage and refinance in California very soon. So, you may just go to the nearby financial institutions to find out all the necessary things that you need to do or prepare and get your refinance in California without any delay.