Don’t Let Jumbo Loan Costs Stop Your Dream Home Purchase

A jumbo loan is a loan that exceeds the bounds of a traditional loan for one’s mortgage. There is a cap in most counties in the United States of $510,400 for a mortgage loan, but some people need more money than that to purchase the home that they want.

These loans are not backed by Freddie Mac or Fannie Mae, and that makes them considerably more risky for the borrower. That being said, the only people who can and should apply for a jumbo loan are those who have considerable income and resources.

The required credit score for this kind of loan is at least 700, but it can be as high as 720 depending on the exact lender and the preferences that they have regarding who they lend to. Only highly qualified buyers need apply.

Know What It Means To Have An Encumbrance

A reconveyance deed is commonly used to remove an encumbrance to “reconvey” a clear title to the property owner. The most common types of real property encumbrances are mortgages, property tax liens, and deed restrictions. When a mortgage is paid off, the encumbrance is removed from public records of the property.

In the case of a tax lien, a lien will remain on the property until the tax is paid. In some instances, the owner may be forced to sell the property to satisfy liens. A deed restriction places conditions on how a property may be used by a future owner. A good example is farmland preservation encumbrance where there is a stipulation that the land may never be used any other purposes.

Deed Of Trust: What Does It Mean?

A deed of trust is a legal instrument that serves as an agreement between a lender and a borrower to place a piece of property into the hands of a third party as a trustee. The third party holds the property until the borrower can pay it off, but the borrow retains all of the responsibilities for maintaining the property. The borrow also holds the title to the property during this time.

This arrangement means that the trustee must be prepared to sell the property in the event that the borrower does not meet their debt obligations on it. It is not a common arrangement, but it is one that may still be explored. It is the responsibility of the trustee to remain neutral in everything related to this property, and they must view what they do as favoring the borrower nor the lender in particular.