Understanding Jumbo Mortgage Financing

If you're considering purchasing a high-value home in the United States, you'll most likely need to secure a jumbo mortgage. With interest rates close to their all-time lows, now could be the best time to find a jumbo home loan if you are considering refinancing your existing mortgage. Take a look at these frequently-asked questions to familiarize yourself with these special types of home loans.

1. What is a jumbo mortgage?

A jumbo mortgage are special types of home financing instruments that are designed for high-value properties. Conventional loans have limits, so homes that are purchased at an amount higher than those limits requires special financing. The loan limits are set by the Federal Housing Finance Agency (FHFA).

2. What type of interest rates do jumbo loans have?

Depending on the market, and your own financial status, jumbo loans typically have a slightly higher interest rate than conventional loans. Jumbo loans are not sold to Fannie Mae and Freddie Mac in the secondary markets which limits lenders' abilities to quickly sell these mortgages.

3. What is the conventional loan limit?

Conventional loan limits will vary by location, property and can be higher in areas with higher home values.

In 2010, the conventional loan limit for a one-unit property was $417,000 for the continental U.S. ($729,750 for higher-cost areas) and $625,000 for Alaska and Hawaii ($938,250 for higher-cost areas). The loan limits for single family homes may vary from that of multi-family units.

Check with a real estate or mortgage professional who is familiar with your area to learn more.

4. What are the different types of jumbo loans?

There are several loan programs that fall under the jumbo loan umbrella. They can have fixed or adjustable rates. Most fixed rate jumbo loan programs are for either 30 or 15 years. The most popular adjustable rate jumbo loan programs are 5/1 and 7/1 ARMs. There are also adjustable rate mortgage programs that have introductory rates for 3 years and 10 years.

5. What kind of credit score do I need to qualify for jumbo financing in the US?

These numbers can vary by lending company, but a minimum score of 620 is usually needed for a full-documentation loan and a minimum score of 680 is often required for an interest-only jumbo mortgage.

For more information on jumbo financing, speak with a licensed mortgage professional serving your community.

Get Mortgage Life Cover

If you have a mortgage, then mortgage life cover will make sure the loan is paid off in the event of your death, or, if you take out some add-on benefits, should you suffer from a critical illness or cannot work due to illness or disability.

Mortgage insurance is often called 'decreasing term cover' because the policy lasts the life of your mortgage and pays out a smaller amount each year as your mortgage decreases.

Although the amount of cover the policy pays out decreases in line with what you owe your mortgage lender, the premium you pay the insurance company each month stays the same.

These mortgage policies are cheaper than term life insurance and are guaranteed to pay off you mortgage if you die unexpectedly - providing you haven't increased your mortgage without increasing the sum assured under the policy, of course.

If you do borrow more, you should review your policy and consider taking out a top-up.

Remember, if you outlive the mortgage policy, you and your family get nothing. The policy only pays out when you die during the policy term unless you have included optional extras at additional cost.

These extras include:

· Waiver of premium

The insurance company pays your premiums for a set period if you cannot work due to sickness or disability

· Guaranteed or reviewable premiums

If your premiums are guaranteed they remain the same for the life of the policy. Reviewable premiums are adjusted periodically, meaning you can end up paying significantly more than you started with for the same cover.

· Critical illness

This add-on pays out a lump sum if you are diagnosed with an illness listed in the policy documents regardless of whether you return to work at a later date.

Most insurers won't pay out on your death if they have already paid out for a critical illness.

· Terminal illness

If the policyholder is diagnosed with a terminal illness, the policy pays out early.

Mortgage life cover is available on a single life or jointly with a partner or spouse if you hold a mortgage in joint names.

For a single life, the policy pays out on the death of the policyholder - or if one of the add-on events is triggered.

For joint lives, you have a choice on how the policy pays out.

Either the policy pays out on 'joint life, first death', that leaves the surviving policyholder with the cash.

Alternatively, the policy can be 'joint death, second life', sometimes called 'joint life, last survivor', which pays out on the death of the surviving policyholder. This would pay off the mortgage and leave children with an asset they could continue to live in or sell.

If you have mortgage life cover, always consider putting the policy in trust. This is simple to do and costs nothing. Generally, the insurance company provides a deed of trust.

Putting the policy in trust effectively puts the policy outside of your estate, so the money goes straight to your family rather than sitting in probate while your executor sorts out your will.

David Thomson is Chief Executive of BestDealInsurance an independent specialist broker dedicated to providing their clients with the best deal on their life insurance, critical illness cover and home and motor insurance.

Mortgage Life Cover For Peace of Mind For Your Loved Ones

Taking out a mortgage is a huge responsibility as, if you do not continue to meet your mortgage repayments, you are at risk of losing your home. With this in mind you might want to give some thought as to how your loved ones might manage if you as the main wage earner were to die before the mortgage balance was paid off. If you want peace of mind of protection for your mortgage in the event of your death then you may wish to consider mortgage life cover.

What is mortgage life insurance?

Mortgage life cover is also known as decreasing term insurance and is one of the several types of life insurance available. This specific type of protection is typically taken out by the main wage earner, the one responsible for repaying the mortgage each month. If both partners pay an equal share in the mortgage repayments then you may wish to take out mortgage life insurance for both names on the same policy, a joint policy. If taking a joint policy the insurance company typically pays out upon the death of the first policyholder. Alternatively, you may wish to take out separate policies.

How does mortgage life protection work?

When taking out mortgage insurance life cover you take out the policy for the amount that is left outstanding on your mortgage at the time of applying for the life cover. For instance, if you have £10,000 left to pay on your mortgage this could be the sum insured.

The term you take your mortgage life cover over is the term that is left on your mortgage at the time of applying for life insurance. For example, if you have 5 years left to pay on your mortgage this is the term that you take out mortgage life insurance over.

With the above example, you are covered for £10,000 and for a term of 5 years. If the person named on the insurance were to pass away during the 5 year period, the mortgage balance would be cleared by the proceeds from the life insurance.

As you continue to pay your mortgage each month the amount left owning on it decreases of course, and so does the amount your decreasing term insurance pays out. If you outlive your insurance policy this means you have paid off your mortgage and there is no balance, so there is no payout and the policy simply expires.

Mortgage life cover may make a huge difference for your loved ones in the event of your death. Without a policy, they may struggle to find the money for the mortgage repayments and this may, in the worst case, lead to repossession and eviction. You may also wish to give some thought to how you and your family might manage if you suffer a critical illness. With advancements in medicine, many people suffering from a critical illness now live longer with their incapacity. However if you are disabled and unable to work you may struggle to find the money for your mortgage repayments. With this in mind you may want to consider having critical illness insurance alongside your decreasing term insurance.

David Thomson is Chief Executive of BestDealInsurance a completely independent specialist broker dedicated to providing their clients with the best insurance deal. They offer great value life insurance as well as, critical illness and income protection, ensuring that their clients have the protection they need, without leaving a hole in their pocket.

Choosing Life Cover to Protect Your Mortgage

Buying a family home is a time when many people begin thinking about taking out a life insurance policy to go along with it. A mortgage is very often the most significant financial decision that any individual makes, and it is always prudent to find a way of protecting your mortgage, to ensure that your loved ones will not suffer financially from the loss of your income if you should die. A carefully-chosen life insurance policy is an ideal method of achieving this protection.

Level Term and Decreasing Term Life Cover

The most common way of protecting your mortgage is to purchase term life assurance. Selecting life cover for mortgage protection requires making a choice between two different types of insurance-level term and decreasing term insurance.

If you purchase level term life cover, the amount you are insured for remains constant over the life of the policy. With a decreasing term policy, on the other hand, the size of the potential pay-out decreases as the mortgage is paid off. Regardless of which type you choose, the policy ends automatically if a claim is made, or when the mortgage is paid in full.

The Cost of Mortgage Life Insurance

The cost of mortgage life cover depends on several factors. The most important determinant of the cost of the policy is the terms and conditions of your mortgage-the amount you borrow, and the amount of time you'll require to pay the mortgage in full. As will all types of life cover, the cost also depends on your lifestyle, age, and physical health. Lastly, the type of policy you choose-level term or decreasing term insurance-also affects the cost.

In most cases, level term mortgage cover is more expensive than the decreasing term variety. This is because with decreasing term insurance, the size of the pay-out decreases over time, so the overall cost of premiums is reduced to reflect that. Because all other aspects of these two types of policies are more or less equal-in both cases, the mortgage is fully paid in the event of a claim being made-the type of insurance you get will typically depend on how much you can afford.

Level term cover does offer one advantage that decreasing term insurance does not. Because the size of the pay-out is constant over the life of the policy, your dependents will benefit from increased financial security if there is money left over after the mortgage has been paid. For this reason, level term insurance should be your goal if it's affordable. This type of insurance provides another advantage if you have an interest-only mortgage, as your repayments increase over time, and equity is slow to build-a level term mortgage can provide increased financial security in this case.

Other Considerations

Two other important decisions to make are whether to choose joint insurance or two separate policies for you and your partner, and whether or not to purchase additional critical or terminal illness cover. Some policies may include this coverage automatically, and some don't, so it's always important to read the fine print and make sure you understand what you're covered for. By the same token, a joint policy isn't always the best solution, even for a married couple, so it's equally important to check investigate all your available options thoroughly before deciding between joint and separate policies.

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Life Cover - Protecting Your Mortgage

For most of us, a mortgage is the essential source of funds that enables us to buy a home. We commit ourselves to making monthly repayments over many years. But what if the mortgage holder dies before the loan has been fully repaid? Would those left behind, family and loved ones, have sufficient resources to pay back the lender? If not, would the property have to be sold to obtain the necessary funds? Even if the deceased's nearest and dearest were able to pay off the loan, what impact would that have on their finances?

There is an obvious need to ensure that funds are available, on death, to pay off the mortgage. This is where a decreasing life cover policy can play an important role. This type of policy pays out a lump sum, on death or diagnosis of a terminal illness, and the amount payable decreases over the term of the policy. This is ideal for those with a repayment mortgage, where the amount of loan repayable also reduces throughout the mortgage term. Decreasing life cover is also less expensive than level life cover (where the amount payable on death stays the same throughout the term of the policy). Cover can be taken out by one person or by two people jointly. For joint policies, the life cover will be payable on first death.

The lump sum payable, under a decreasing life cover policy, will often reduce at a fixed rate set by the life cover provider. This amount may be more or less than the actual mortgage debt on death. Some providers offer to match the outstanding loan amount subject if specific conditions are met. These conditions are, typically, that the loan has stayed as a repayment mortgage, that all loan repayments have been made and that the mortgage value or term have not been increased. Many policies also offer a free period of cover, subject to certain conditions, between the exchange of contracts and completion stages of a mortgage.

Another common feature is to allow policy owners to increase their amount or term of cover when they either move to a new home or make home improvements. The increased cover, subject to certain conditions and limits, requires no further evidence of health, occupation or pastimes. The overall cost of the cover will also increase.

So, for anyone with a mortgage, it makes extremely good sense to ensure that appropriate life cover is in place. This will ease the financial burden faced by their loved ones, should the worst happen. The cost and features of decreasing life cover make it the obvious choice for mortgage protection.

John Lewis Insurance offers a range of insurance services selected by the John Lewis Partnership. These include home, car, pet, travel, wedding, event and life assurance products. Customer can visit Johnlewis-Insurance.com for further information.

Mortgage Life Cover - Protecting Your Loved Ones

Taking our protection to ensure that your family would not be left struggling financially in the event of your death is essential. Life is hard after the loss of a loved one and this is a time when they do not want to be worrying where to get money from to pay monthly outgoings. One of the outgoings could be a mortgage, if you want to ensure that your family would be left mortgage free in the event that you passed away while still owing on the mortgage then you could consider taking out mortgage life cover.

Mortgage life cover is known as decreasing term assurance. The insurance can be taken by the policy holder insuring the remaining balance of their mortgage over the term left on the mortgage. As the name of the policy suggests the amount that you insure, which your loved ones would get back, would decrease in line with the mortgage balance as you pay off the mortgage each month. If you outlive the policy then the mortgage will be paid up and so no payment would be made. If you should pass away at anytime during the term of the life insurance your loved ones would get the amount left on the mortgage at the time of your death.

The cost of life cover would take many different factors into account. One of the things that will set the premiums is of course the amount you choose to insure. Your current age will also be taken into account when you take on life insurance as will any ongoing medical conditions. If for example you suffer from diabetes or asthma then you could expect to pay out more in premiums for life insurance. Your family history will also be taken into account and any illnesses taken into account. If you are seen to have a job that is dangerous then you could also expect to pay out more for your insurance. The same would apply to if you took part in any dangerous activities which could include such as flying and mountain climbing.

Of course mortgage life cover would only provide your loved ones with financial security in the event of your death for your mortgage. If you wanted to leave your family financially secure so they would have a sum of money in the event of your death to be able to maintain their way of life in general and any other outgoings they might have then you would need to give some thought to taking out a different form of life insurance. You might want to give some thought to taking out term assurance or whole of life insurance. Term insurance could be taken by choosing how much cover to take and how many years to take it over, if you passed away during this time your loved ones would receive a lump sum payment. If you outlived the policy it would expire and no pay out would be made. Whole of life can be taken by choosing how much life cover is needed and as long as you continue to maintain those payments your family would receive payment upon your death.

David Thomson is Chief Executive of BestDealInsurance an independent specialist broker dedicated to providing their clients with the best insurance deal on their home insurance, car and life insurance.