If you are looking into getting a jumbo loan for a home or property, you might be wondering how long the closing procedure is. Since jumbo loans are different from regular loans, you might assume the closing process will take longer.
A jumbo loan does not necessarily take longer to close than other loans. If you provide all the documentation necessary and submit it to the loan officer on time, you will be able to secure a jumbo loan in a short period of time.
If it’s your first time trying to secure a jumbo loan, you might have several questions. We will answer many of them in this article. We will cover what a jumbo loan is when you might need one, and what documentation you need to secure one.
What Is a Jumbo Loan?
You will need a jumbo loan if you are trying to finance a property that costs more than what a conventional loan will cover.
Conventional loans have a max amount of $647,200. If you are financing a property more than this, a jumbo loan will be your only option.
Sometimes a jumbo loan is called a non-conforming conventional mortgage. Jumbo loans are riskier for lenders because the lender is not protected if you default on the loan.
This is why lenders ask for extensive documentation before they will give you a jumbo loan
What Documents Are Needed for a Jumbo Loan?
Since jumbo loans give you significantly more money, you will need to provide a large amount of documentation before you can get one.
Most borrowers who get a jumbo loan usually earn revenue from investment properties or several businesses.
You will need to show more documents to show your income from all these different sources.
You will also need to show the cash reserves you have whether they are in a bank account or through investments.
Here are some of the things a loan officer will ask for:
- Full tax returns from several years
- All W-2s and 1099s
- Bank statements from all accounts
- Investment account information
Keep in mind that a loan officer might ask for more documents to prove your income if they feel the above is not enough.
What Can Delay a Jumbo Loan?
As you can see, a jumbo loan requires more documents than conventional loans.
However, if you are able to give the loan officer all these documents in a short timeframe, you will usually be able to secure a jumbo loan in no time.
However, sometimes the lender will ask for additional information which can delay the processing time.
They might look at your tax returns and investment forms and ask to see more proof.
Not Enough Cash Reserves
They might also ask you for more information about your cash reserves. The more documents they ask for that need to be verified, the longer it will take for the loan to be approved.
Some lenders will ask for more proof of cash reserves than others. You will often need to show that you have enough cash reserves to cover one year of mortgage payments.
Sometimes a home that costs more needs two different appraisals which can delay the approval process. If the home costs more than $2 million, it always needs at least two appraisals.
Each appraisal takes about two weeks so this can add time to the approval of the jumbo loan. Some states and counties have a longer appraisal process that can take over a month.
Home appraisal delays are one of the most common reasons you will not receive a jumbo loan at the same time as a conventional loan.
How Can I Close on a Jumbo Loan Faster?
If you are finding that your jumbo loan is closing much slower than you expected, there is not much you can do.
Most lenders and loan officers will keep you updated on the progress and hopefully inform you if there are any problems.
Feel free to call your loan officer if you have not heard from them in a long time. They are there to help you.
The only thing you can do to close on a jumbo loan faster is to keep submitting all the paperwork they ask for.
If you delay in giving them the right documents, they will take a longer time to review them which will affect the closing date.
Try and get them the requested documents within a few business days for a faster closing date.
You can usually close on a jumbo loan within the same timeframe as a conventional loan. However, delays can happen when they ask for extra paperwork or an extra appraisal.
In this case, you need to submit all the extra documents right away.