Compare Mortgage Rates on a Jumbo 30-Year Fixed-Rate Refinance
Maybe you’re considering a refinance but you have a large balance on your current mortgage. Or maybe you’re hoping to cash out a significant amount of your equity. Refinancing into a new but big loan might put you in the jumbo category. That will introduce some different requirements for your refi, but it might be the best option for your specific needs.
To help you decide if a jumbo 30-year fixed-rate refinance is the right fit, it’s important to understand how this kind of loan works. Then, make sure you explore what kind of rates lenders are offering for these refis right now.
What is a jumbo 30-year fixed-rate refinance?
There’s a lot to get into with this kind of home loan, so let’s break it down piece by piece:
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Jumbo: Each year, the Federal Housing Finance Agency (FHFA) sets limits for mortgage loan amounts. Anything under that is considered a conforming loan. If you want to borrow more than the current FHFA limit in your area, you’ll need to get a jumbo mortgage.
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30-year: This tells you how long you have to pay off the loan. 30 years is the maximum most lenders offer. That helps to break up your total loan amount into smaller monthly payments, but it also gives interest more time to accrue.
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Fixed-rate: With this kind of mortgage, your interest rate stays the same for the entirety of the loan (compare against an adjustable-rate mortgage [ARM]). A fixed interest rate helps to keep your monthly payment predictable and, ideally, manageable — a boon with the large loan balance that comes with a jumbo loan.
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Refinance: A refinance doesn’t change the terms of your current mortgage. Instead, it replaces your current loan with a completely new one. You’ll use some or all of the money from your new mortgage to pay off your old one. If you tap some of your home equity to borrow more than your current balance, that excess turns into cash in your pocket. Lenders call this a cash-out refinance.
So, taken together, a jumbo 30-year fixed-rate refinance means replacing your current mortgage with a new one that exceeds current FHFA loan limits, has a fixed interest rate, and a 30-year repayment timeline.
The pros and cons of a jumbo 30-year fixed-rate refinance
These kinds of refis come with some risks, but they can also deliver advantages when used by the right kind of borrower. Weigh the potential drawbacks and perks before you choose this option.
Pros of a jumbo 30-year fixed-rate refinance
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If your current mortgage balance already tips you into jumbo territory, this kind of refinance has the potential to make your monthly payments more manageable. If you refi from an ARM to this fixed-rate option, for example, you’ll get predictability. Or if you refi from a shorter-term loan into the 30-year term, it can lower your monthly payments.
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This kind of refi gives you the option to cash out some of your equity, even if doing so means taking on a loan that exceeds FHFA limits.
Cons of a jumbo 30-year fixed-rate refinance
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Lenders tend to see jumbo loans as higher risk, so they might charge you a higher interest rate and/or set stricter qualification criteria. You may need to leave more equity in your home, for example, limiting how much you can cash out.
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Because of the large balance and long repayment timeline, jumbo loans with 30-year terms cost borrowers a lot in interest.
How to compare Jumbo 30-Year Fixed-Rate mortgage rates
If you only take one piece of advice when you’re getting a mortgage, let it be this: compare rates from at least three different lenders. Doing so can save you thousands of dollars over the life of your loan.
To make it easier for you to put the work in here, follow these steps:
Step 1: Understand your borrower profile
First, you want to get a handle on how mortgage lenders are going to see you. If you look like you’re going to be able to repay your home loan fairly easily, they’ll offer you more favorable conditions. If you look high-risk, you’re going to pay more for your mortgage. Specifically, you’ll be charged a higher interest rate.
So, what makes a borrower low- or high-risk? To decide what kind of loan to offer to you (if any), lenders look at a lot of factors. The biggest ones here include:
- Your monthly income — you don’t want an overly large chunk to have to go toward paying your monthly mortgage bill, which lenders measure with your debt-to-income (DTI) ratio
- Your credit score, which essentially tells them how good you’ve been with managing money in the past
- Your loan-to-value (LTV) ratio (higher is riskier) — the price of the house and your down payment size both come into play here
If you’re not in good shape in any of these areas, putting in some work before you buy (e.g., working on your credit score, lowering your DTI ratio) can help you get a lower interest rate.
Step 2: Use rate tables to see what’s on offer today
There are lots of resources online that show you rate offers from leading lenders. Use a mortgage rate table to get a feel for what kind of interest rates are available from financial institutions that provide home loans in your area.
Ideally, that rate table lets you input personal information, like your credit score and the price of the house you want to buy. This way, the rates you get shown should align with what you’re actually eligible to get. A lot of lenders advertise low starting rates, but only the “best” borrowers will be approved for them once they apply.
Step 3: Get preapproved with three lenders
Once you’ve picked out a few lenders that look good to you, go through their preapproval process. That will mean filling out some paperwork, but it’s the best way to figure out what you can really qualify for in terms of loan size and interest rate.
Have financial documents — like your bank statement and pay stubs — handy to make it easier to complete your preapproval applications.
Step 4: Compare preapprovals
When you get preapproved, the lender should give you documentation about your potential mortgage. Ideally, this gives you a feel for the total amount you’re borrowing, the repayment term, the interest rate, fees, and closing costs.
Line up your quotes from each lender and go through them, paying special attention to the annual percentage rate (APR). This tells you how much you’ll pay each year for the loan including not just interest, but also fees. By looking at APRs, you get a clear idea of what you’ll truly pay if you choose that specific mortgage. This helps you identify the best option for yourself and your financial goals.
If you’re ready to start comparing Jumbo 30-Year Fixed-Rate rates, use our rate table to get started. We have fields up top where you can input key details like your credit score range and zip code so we can best tailor the mortgage rate offers to you.