Countrywide mortgage lender provides online non-conforming refinance loans with unique rate options like interest only, negative amortization and fixed interest rate terms of 30 and 40 years.
A jumbo loan is a loan is a non-conforming loan that is above the 2006 Fannie Mae and Freddie Mac conforming limit of $417,000 for the continental U.S. limit and $625,000 Alaska, Hawaii and U.S. Virgin Islands limit. According to NexTag, conforming loan limits are based on the current housing industry, the increase in home prices, and the rate at which homes are selling.
Jumbo loans are higher risk for the lender because it's a lot harder to sell high-priced homes quickly for the full price. To offset some of the risk, jumbo loan lenders generally prefer to have a 25% down payment, and the interest rate is usually .25% to .5% higher. Jumbo loans were originally used to finance luxury homes, but with rising housing costs, especially in areas like California and Florida with median home prices exceeding $500,000, there is more and more of a need for jumbo mortgage loans just to buy regular houses.
Jumbo loan options are similar to traditional loan programs. Borrowers have the option of traditional fixed rate payments or a variety of adjustable rate mortgages (ARMs). However, because of the loan amount, interest only loans and payment option ARMs (two of several hybrid ARMs) are increasingly popular ways for buyers to increase their purchase power and have more affordable house payments.
Payment option loans are known as such because the borrower generally gets four payment options: a minimum payment option (typically a payment option mortgage with a 1% start rate), an interest only option, a fully-amortizing payment option (full principal and interest payments) and an option that allows borrowers to pay off the mortgage loan early. Because the minimum payment doesn't even cover the full interest and the mortgage payment remains the same when interest rates rise, the payment option ARM is also considered a negative amortization (neg am) loan.
Should I refinance my negative amortization mortgage?
Very few home equity lenders will go behind a negative amortization 1st, so neg am can restrict your secondary loan options. Another problem with neg am loans is that it will eventually reset to a fully-amortizing loan, which can result in a huge hike in your monthly house payments. So, depending upon the credit score you may need to refinance your negative amortization 1st before your loan resets and your payments increase or if you're considering a second mortgage later on.
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