Which of the following is typically true about jumbo loans compared to conforming loans?
Correct Answer
B) They require higher credit scores
Jumbo loans typically require higher credit scores than conforming loans because they cannot be sold to Fannie Mae or Freddie Mac, creating additional risk for lenders. Most jumbo loan programs require credit scores of 700 or higher, compared to conforming loans which may accept scores as low as 620.
Why This Is the Correct Answer
Jumbo loans typically require higher credit scores than conforming loans because they cannot be sold to Fannie Mae or Freddie Mac, creating additional risk for lenders. Most jumbo loan programs require credit scores of 700 or higher, compared to conforming loans which may accept scores as low as 620.
More Mortgage Knowledge Questions
A borrower is comparing two loan offers: Loan A has no points and 4.5% interest rate, Loan B has 2 points and 4.0% interest rate. The loan amount is $400,000. How much will the borrower pay upfront for the points on Loan B?
A lender charges a 1% origination fee on all loans. For a borrower obtaining a $250,000 mortgage, what is the maximum origination fee that can be charged without violating the points and fees test under the ATR/QM rule for a first-lien mortgage?
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A borrower asks about the difference between discount points and origination fees. What is the most accurate explanation?
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