Need a loan outside the conforming loan limit? You still have options even if you have been rejected for a jumbo Kansas City home loan. When the housing market crashed in 2007, many flexible options went to the wayside. However, the market’s recovery over the past two years has revived some of these older programs. If you have just suffered a jumbo loan rejection, consider:
- Lenders who avoid the secondary mortgage market
- Piggyback mortgages
Look for Lenders Who Keep Their Loans
Rejection is common in the jumbo loan market because they are a high-risk endeavor. Even people with good credit, assets, and income have difficulty qualifying. Non-conforming loans usually cannot be sold in the secondary mortgage market because they go over the Freddie Mac and Fannie Mae Kansas City home loan limits. This condition means that your lender takes full responsibility for your loan if you foreclose. Therefore, they want to be as certain as possible that you will make your mortgage payments on time.
However, some lenders are less active in the secondary mortgage market and therefore worry less about their ability to sell your mortgage to another lender. Actively seek out these lenders if you believe that your credit history and other qualifiers imply that you are a good candidate for a jumbo Kansas City home loan.
Apply for “Piggyback” Loans
If you consistently get rejected for jumbo loans—even by the lenders described above—you can still get a larger home by combining two mortgages. Secondary mortgages, or “piggyback loans,” allow you to secure the loan with your house. While people use secondary mortgages for a wide variety of expenditures, it is possible to combine them with your primary home.
However, these mortgages are more risky than your average Kansas City home loan because if you don’t repay it you can lose your house. Be sure to weigh the pros and cons before signing on for that piggyback.