California Super Jumbo Loans

According to Forbes, 13 of the 25 most expensive zip codes are located in the state of California. Of course, California has always enjoyed a reputation as a particularly wealthy state, and its enormous homes are well known around the world, often seen on TV shows such as the OC.

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Reality, it seems, is very similar to fiction. The median sale price for a home in Newport Beach, Orange County, is $2,297,500, truly enormous sum of money. Now, while the residents of this area are clearly among the wealthiest in the nation, few real estate buyers can afford to simply write a check for that sort of sum. As a result, even the wealthiest homeowners rely on a long-term mortgage to help spread the cost.

Unfortunately for them, the federal government won’t back a mortgage for that kind of money. Any home loan valued above $417,000 (at time of writing) will qualify as a jumbo loan, and must be backed by private interests. However, even jumbo loans are not enough to purchase some California properties. For properties such as these there is an entirely different class of home loan to cover expensive properties in California super jumbo loans intended to finance the purchase of home valued at anywhere from $1million and up.

Since these loans are not funded by the federal government, private interests must step in to accept the risk. As a result of this a buyer taking out a super jumbo mortgage can expect to pay a slightly higher interest rate for the loan in comparison with a conforming loan, this reflects the increased risk assumed by the lender. A homebuyer must take this into account when considering purchasing a home in California that would require a super jumbo loan.