A jumbo mortgage is basically a home equity loan, which can have higher credit quality than most conventional conforming loans, but is nevertheless in an amount higher than usual conventional loan limits. This is because a jumbo loan is typically used for bigger financial transactions and as such, has higher interest rates and other costs. However, as with any loan, there are fees to consider. In this article, we will be discussing some of the fees involved in jumbo mortgage loans.
One of the biggest fees which are commonly associated with a jumbo mortgage loan is the rate change penalty. The penalty is primarily implemented to make up for the higher amount normally associated with a larger loan. In most cases, you would only have to pay the one percent rate change penalty when you increase your limit from a conventional conforming loan limit to a jumbo mortgage loan limit, and the same rate change penalty will apply if you change the size of your loan from a conventional loan to a jumbo mortgage.
Another type of fee that you may encounter with a jumbo loan is the appraisal fee. Appraisal fees are often referred to as “Wells Fargo fees” because they are imposed at the same time that Wells Fargo loan originated. The appraisal fee is based on the appraised value of the property. On the majority of cases, the appraised value is actually lower than the value of the property. If you are refinancing a conventional loan that originated with Wells Fargo, and you have decided to go with a jumbo mortgage, you will have to get this appraisal done at a different bank.
The third type of fee that you may encounter with a jumbo mortgage loan is the establishment fee. Fratantoni loans are offered by several major commercial mortgage bankers association. It is likely that several of these banks will have a similar setup with regard to how these fees are applied. They will generally charge an establishment fee equal to one percent of the total face value of the loan. If a jumbo mortgage has a higher percentage than the prime rate, the establishment fee will be calculated at two percent instead of one percent.
You should realize that a non-customer lender like Wells Fargo, has no obligation to work with a specific institution to refinance a jumbo loan. If you choose not to work with a specific institution, there is no penalty. If you do not have a relationship with one of the major banks, you will still be able to get a Wells Fargo jumbo loan. Many customers find that they can get better interest rates this way.
When you purchase a home, you should be aware of the fees and charges that apply. Although it is not a legal requirement, you may want to request that the mortgage lenders include fees in the fine print. One of the most common fees pertains to the conforming loan limit. If you purchase a jumbo loan for more than the conforming loan limit, you will not be allowed to pay the excess funds back on the home loan.
This conforming loan limit can apply to other types of mortgages such as the fixed or adjustable rate loans. In addition to the non-customers, Wells Fargo also has a special category of commercial loans known as PMI. These mortgages are for non-customers only. The only difference between these non-customers and the customers is that the PMI fees will be applied to the expenses incurred on the jumbo mortgage loans instead of on the principal loan amount. Wells Fargo uses the term “PMI” to describe these loans because it means “Permanently Missed”.
The last thing that you need to know about the PMI limits that you pay for your home is that they are not tax deductible. So if you owe money on your Wells Fargo loans, you can subtract these limits from the amount of interest you owe on a regular basis so that you do not have to pay taxes for the PMI fees. However, you should only subtract the PMI fees from the interest on a regular basis when you have reached the maximum limits for the non-customers and then only on the principal loan amounts. This way, you can keep your taxes down, as well as your payment obligations with Wells Fargo.