Jumbo Loan Refinance: A Complete Guide

Refinance Jumbo Loan Requirements

Lenders who offer giant mortgage refinances have stricter requirements than conventional, FHA Where AV loans.

Carefully consider the following requirements before applying for a jumbo loan refinance.

Credit score

Your credit score is a three-digit number that indicates how well you manage your debts, both currently and in the past. For 30-year fixed rate loans, the average median credit score accepted by most lenders who offer refinance for jumbo loans is 680. For 15-year fixed rate loans and ARMs, you will need with a credit score of 700 or higher. You may need a credit score of 760 if you are not refinancing a primary residence or single family home for investment properties or rental properties.

Debt to income ratio

Your debt-to-income ratio (DTI) tells your bank or credit union how much of your monthly income you use to pay recurring bills, such as your mortgage payment, minimum payments on credit cards, student loans, personal loans, and loans automobiles. They use it as a yardstick to assess your risk as a borrower. You present more risk to a lender if you have a high DTI. In most cases, you should have a DTI no higher than 36%.

payment history

You will also need to have a clean payment history with no late or missing or recent mortgage payments. bankruptcies in order to obtain a jumbo refinance loan.

home equity

Lenders will require you to have a certain amount of home equity before considering a jumbo refinance. Some types of jumbo refinance, such as cash refinances, may require more equity than others. Your jumbo refinance depends on the current value of your home. Most lenders require you to have a certain loan-to-value (LTV) ratio which measures the appraised value of a home relative to the amount you wish to borrow.

The appraised value of a house is the market value of the house. Since most lenders require you to leave 20-30% of your home equity after you refinance your jumbo loan, you may not qualify for a cash refinance if you are still in the early stages. years of your loan term.

Liquid reserves

Borrowers with a jumbo loan will need cash reserves. Cash reserves refer to the excess cash you have in the bank and in investments. Your lender should know that in case of financial difficulties, you will be able to make your monthly payments. Cash reserve amounts vary by lender, but at Rocket Mortgage® you will need 6 months of cash reserve for loan amounts under $1 million. Loan amounts over $1 million require one year of cash reserves.

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