Blog :: 03-2019

What's the difference between a jumbo loan and a conventional loan?

What's the difference between a jumbo loan and a conventional loan?

The major difference between a conventional loan and a jumbo loan is that conventional loans are limited to dollar amount set by Fannie Mae; Jumbo loans are loans of any amount above that limit. See below for more details...

Conventional Loans

Conventional loans are probably the most common type of mortgage loan. Conventional loan qualification is determined based on income, employment history, debt, and credit score. There are also conventional loan limits. In Oregon, it is currently $484,350 in most areas. Generally, conventional loans require at least a 3-5% down payment. Additionally, if your down payment is less than 20%, you will be required to pay private mortgage insurance (PMI) until you reach at least 20% equity. PMI insures the lender in case of default. Once you reach 80% equity, the PMI goes away.

Jumbo Loans

Jumbo loans are very similar to conventional loans but the criteria for qualifying is stricter because they don’t have the loan limits that conventional mortgages do. In Oregon, any loan over $484,350 is considered a “jumbo” loan. Qualification for a jumbo loan uses the same criteria as conventional loans, but usually requires a higher down payment, income, and credit score due to the higher amount of money being loaned.

Have more questions, or want a referral to a good lender? Contact us, and we’ll be happy to help you!

 

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How to choose the right seller's agent

In a previous post, we talked about how to choose the right buyer’s agent by doing your research and assessing important factors like communication style, knowledge, and negotiation skills. In addition to that advice, we’ve compiled additional tips to help you choose the right listing seller’s agent.

(Scroll down to learn more...)

When choosing a seller’s agent, consider the following:

  • The CMA (Comparative Market Analysis): Does the value of your home seem accurate based on current market conditions, and are the comparable properties used to determine value located in the same neighborhood?

Beware of agents that give you a much higher market value than similar comparable properties and that other agents you’re interviewing have given. This could mean they are just telling you what you want to hear to earn your business, and your home won’t actually sell for that amount. Additionally, overpricing when you first list your home for sale can keep your home on the market longer, and still won’t sell for the asking price. 

  • Marketing Strategy: How does the agent plan on marketing your home? Is this in line with your goals? Is there something specific you want in the marketing plan that you’re not seeing? If so, ask if the agent can add it.

Marketing is more important to some than to others. If you have a specific vision for marketing your home to potential buyers (or, conversely, you want very little marketing), make sure you’re on board with the marketing strategy your real estate agents plans to use.

  • Commission Amount, and Split: How much commission will you be charged? What are you getting for this fee? How is the commission split between your agent and the buyer’s agent?

Often times, agents that charge very minimal commissions do very little to represent you. For instance, an agent may only charge 3.5% to a seller, where 2.5% is going to the buyer’s agent commission and they are only taking 1%. Be sure to ask exactly what this agent will be doing for this commission. Often times, these agents will only be facilitating paperwork – not hiring a photographer, doing marketing, or negotiating on your behalf.

Have more questions? Contact us! We're happy to offer expert advice on selling your home.

 

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Join us on Tuesdays at 1pm PST for our "Dear Claire" Facebook Live series. Subscribe to our YouTube channel today to help us reach our goal of 100 subscribers.

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