At SoFi, we know our members are committed to financial wellness. We also know they’re working hard to accomplish great things in their careers. So aside from offering financial solutions, our Career Coaching team is here to help them excel and reach the goals they set.
Read moreA jumbo loan is a mortgage that exceeds specific dollar amounts set by the Federal Housing Finance Agency. What’s considered a jumbo mortgage depends on where the property is located. For most places in the U.S., a mortgage on a 1-unit property is considered a jumbo loan if it exceeds $417,000. However, in places like Hawaii and in certain high-cost counties, jumbo loans may have even higher limits. For example, in San Francisco county, a loan is only considered “jumbo” if it exceeds $625,500 (even though the median house price is much higher than that).
Most lenders offer both fixed-rate and variable-rate jumbo loans.
The main reason that jumbo loans even matter is because many lenders treat jumbo mortgages differently from non-jumbo loans (also called conforming loans). Compared to conforming loans, jumbo loans may have different:
All else being equal, this means that it may be harder to qualify for a jumbo loan from some lenders.
With SoFi, there’s no such thing as a “jumbo loan.” We offer the same great rates and experience no matter how much or how little you need to borrow. Our goal is to accelerate your success.
The LTV (loan-to-value ratio) of a home is a way to compare the loan amount on a property with the property’s value. Lenders commonly use LTV to determine what interest rates they’re willing to offer you.
To calculate LTV, just divide your loan balance by your property’s value. For example:
Generally speaking, borrowers with lower LTVs will qualify for lower rates. This is true whether you’re buying a house or whether you’re refinancing your home.
Lenders tend to charge higher rates when they think there’s more risk, and borrowers who have lower LTVs are perceived to be less risky loans because they have a higher percentage of equity in their house.
If you’re buying a home and have over an 80 LTV ratio (i.e., if you are putting less than 20% down), many lenders will require that you carry and pay for private mortgage insurance (PMI) in addition to your monthly principal and interest payments.
Since the LTV ratio depends only on loan amount and property value, your LTV will change whenever the loan amount changes or when the property value changes. So your LTV will get lower when you pay down your mortgage or when your property appreciates in value.
Example A: Loan pay down without home appreciation
Example B: Loan pay down with home appreciation
PMI is a type of mortgage insurance which, when you purchase a home, is usually required on conventional loans when your down payment is less than 20%. PMI is different than other types of insurance in that it protects the lender, not the homeowner.
PMI rates vary. The rate will depend on the percentage of your down payment, your credit score and the PMI company. Rates generally range from 0.55% to 2.25% of your original loan amount – or $550 – $2,250 for every $100,000 borrowed.
For example, if you buy a home for $500,000 and put 10% down on a 30 year, fixed rate mortgage, and have a credit score of 700, you might pay about $207 per month for PMI.* This is in addition to your monthly payment of principal, interest, taxes and hazard insurance!
If there’s any silver lining at all with PMI, it’s that you usually don’t need to carry it for the entire life of your mortgage loan. Lenders are required to automatically cancel PMI on a conventional loan for your primary residence when your loan-to-value ratio reaches 78%. Or, you can request to stop paying PMI once your loan balance reaches 80% of your original property value.
Each type comes with its own advantages that suit various situations. Choosing the right one can put you in an ideal home buying position.
1. Borrower-paid (BPMI) – The most common type and is often known simply as “PMI.” It is the “default” type of PMI, and the payment is tacked on top of your regular mortgage payment.
2. Lender-paid (LPMI) – The lender “pays” your mortgage insurance for you, that payment is factored in when a lender calculates what interest rate to offer.
3. Single premium – Allows you to pay the insurance premium as an upfront lump sum, eliminating it as an additional monthly payment.
4. Split premium – The least common type of PMI, allows you pay a portion of the insurance as a lump sum at closing. The remaining amount is then paid as borrower-paid additional monthly installments.
[Updated as of 9/27/18: Removed outdated savings calculation information.]
More than 400 organizations adopt emerging employee benefit – student loan refinancing – through partnerships with SoFi; SoFi’s own employees to receive $200 monthly to help pay down their student loan debt
San Francisco, Calif. — March 29, 2016 — SoFi, a modern finance company taking an unprecedented approach to lending and wealth management, announced today it has funded more than $1 billion in student loan refinancing to borrowers entirely through corporate and association partnerships. More than 400 partners, from the Fortune 10 and fastest-growing startups to top professional services firms, banks and membership groups, are helping employees pay down their student debt with SoFi. SoFi also announced today that it is joining these companies in adopting student loan assistance as a employee benefit; the company will now contribute $200 per month to help repay the student loan debt of its own eligible employees.
As one facet of its radical approach to financial services, SoFi is helping these companies lead a shift in employee benefits that reflects the current needs of early-stage professionals. These workers are more concerned with their student debt than they are with saving for retirement. That savings can enable employees to participate in other important voluntary benefits like 401(k) plans and health care savings accounts that they are otherwise forsaking.
A significant percentage of SoFi’s more than 130,000 members are introduced to the company via these partnerships, who range in size from 200 to 200,000+ employees. Participants include Microsoft; Skadden; Workday; Akin Gump; Weil Gotshal; Orrick, Herrington & Sutcliffe and hundreds of others. SoFi offers two employer options, both at zero cost to the employer:
• Employer Contribution Model: administered by SoFi, companies can contribute a regular amount (e.g., $100/month) to their employees’ existing student loans. For those employees SoFi can’t underwrite, SoFi will still administer the employer contribution for their existing loans.
• Classic Partner Model: an entirely free program to employers and associations who offer SoFi as a benefit to their workers and members, generally with a special welcome bonus or other sign-on incentive.
“Student debt has reached crisis proportions in this country, and borrowers – especially Millennials – are struggling to repay their loans and put aside even the smallest amount for their future,” said Catesby Perrin, Head of Business Development at SoFi. “So it makes sense that we’re seeing a lot of excitement about the benefit. It’s truly the hottest employee benefit since the 401(k), and it signals to employees that their companies are invested in their success and addressing the most pressing financial concerns they have right now, not just forty years down the line. Beyond the excitement from borrowers themselves, the positive feedback we’ve received from companies is overwhelming. They see that helping to ease the burden of student loans is an especially meaningful and differentiating benefit to both current and prospective employees,” said Perrin.
The SoFi milestone comes on the heels of news that legislators are also working to make it easier and more appealing for employers to help workers pay down debt. The Employer Participation in Student Loan Assistance Act (also known as H.R. 3861) was recently introduced in the House with bipartisan co-sponsorship, and the Employer Participation in Repayment Act was introduced concurrently in Senate. The bills would revise tax law to prevent workers from getting taxed on employer-sponsored student loan repayment plans.
These efforts aren’t surprising, given that more than 70 percent of employees report they’re stressed about money. And, according to a survey of more than 5,000 job seekers by job search and application site Beyond, nearly 90% of those with debt said they think companies should offer student loan repayment as part of their benefits package. The benefit is a natural fit for leading companies looking to strengthen recruitment, reduce turnover and increase employee satisfaction.
SoFi’s nontraditional underwriting approach considers an individual’s financial well-being to determine creditworthiness, with factors such as employment history and free cash flow. SoFi also offers borrowers benefits that can’t be found elsewhere, such as unemployment protection, an entrepreneurship program, career counseling and member events.
About SoFi
SoFi is a modern finance company taking an unprecedented approach to lending and wealth management. We’ve replaced the impersonal, transactional bank experience with a long-term partnership, enabling our members to realize the full potential of their money, careers and relationships. Our members constantly push the limits of what life has to offer. Whether looking to refinance their student loans, buy their dream home, or simply seek advice as they ascend in their careers, SoFi provides the products and tools to match their ambitions and propel them to new levels of financial greatness. For more information, visit SoFi.com and check out these fast facts.
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Laurel Toney
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