What is a Super Jumbo Loan?
A Super Jumbo Loan is a extension upon what makes a Jumbo Loan, a Jumbo Loan. In the continental United States a Super Jumbo Loan can be classified as a mortgage or sometimes other loans secured with home equity that equals an amount up to or greater than $650,000. It is worth mentioning that lenders may differ in opinion on what constitutes a super jumbo mortgage loan as the definition may change due to the lenders internal investment criteria.
Another key difference is that because the lender can choose what criteria applies to a Super Jumbo Loan they can also choose prerequisites, very often focusing on making the process as risk free for their end as possible. The minimum for most lenders to qualify a loan as a Super Jumbo Loan is $500,000 in normal situations, but it is not unusual to see a Super Jumbo Loan with a higher limit. This is exceptionally true outside the continental United States; meaning Alaska, Guam, Hawaii, and the United States Virgin Islands. In these extra-continental locations it is not at all strange to see the jumbo loan limit raise to $625,000, or roughly 50% higher.
A Super Jumbo Loan can even be set as high as $1,500,000 with an exception to what are known as Maximum Super Jumbo Loan which can reach upwards of $10,000,000 to $20,000,000.
What Can I Expect When Applying for a Super Jumbo Loan?
As one could probably expect the more money being lent to a borrower the more risk that is translated into the interaction. To assuage the risk from a Super Jumbo Loan most lender who are willing to tackle such a large risk include mitigants into their underwriting process to reduce any exposure to excessive risk. Some examples include:
- An Increased Loan To Value, also known as LTV, limits can be lower especially in loans totaling over $1,500,00. While some lenders would, to the proper credit score, offer 100% financing due to the economic trends throughout the years many are unwilling to go past 80%, regardless of credit score.
- Credit Score Requirements, while having relaxed within the few past years are always far more refined then more conforming loan types. Once again this is due to the lack of government backing whether partial or complete. Many people with a score of lower than 620 may be restricted to a Super Jumbo Hard Money Loan. This type of loan is normally restricted to high-net-worth individuals who have had problems from bankruptcy, foreclosure or other credit blemishes.
- Increased Interest Rates, are an often overlooked component to a borrower seeking a Super Jumbo Loan, most borrowers focus on cash flow and any tax benefits, but it is important to realize that lenders will raise the interest in order to reflect on the liquidity of the loan and the risk they will be acquiring.
- Multiple Appraisals and Reviews may be required to accurately assess the property in which the loan is being sought after. Due to the difficulty of appraising and valuing certain luxury items or homes it is not unusual for the lender you are contacting to require two full appraisals at a minimum for qualifying items.
It is important to remember that Super Jumbo Lending is a niche that is arranged by companies specializing in these high risk lending situations and not by consumer focused banks. it may be wise to see which investment banks and private mortgage capital sources are willing to to finance your loan.