Jumbo Mortgages Becoming More Popular

Dated: 01/20/2014

Views: 1302

Jumbo mortgages — loans that exceed the limit for the so-called conforming loans sold to Fannie Mae and Freddie Mac — have been making headlines recently, with some media outlets pointing out that more-affluent borrowers are finding it easier to get larger mortgages.  

In the greater scheme of things, jumbo loans don’t account for a very big part of the market, but they might be the right answer for you if you are interested in buying a home that costs much more than you can borrow with a conforming mortgage loan (currently $417,000, except for high-cost areas around major cities such as New York and Los Angeles where the limit is $625,500). Interest rates for these loans are very competitive and in some cases lower than rates for conforming loans. 
In today’s market, mortgage lenders are happy to tell you about their jumbo loans for a number of reasons: 

Lower rates
 It’s not that often that consumers see interest rates on jumbo loans lower than rates for conforming loans. Typically, lenders charge more for these loans, as the higher balances mean investors are taking on more risk.  Mortgage experts say jumbo rates are likely to remain low this year in comparison with non-jumbos. Lenders are still courting affluent borrowers and want to add more of these loans to their books. The lowest rates will continue to be on the adjustable-rate jumbos while fixed-rate jumbos are expected to get pricier later in the year. 
Tougher guidelines
 Fewer lenders will make exceptions for borrowers who don’t supply full income documentation. Affluent jumbo borrowers have been able to provide partial documentation with some lenders and still get approved—a setup that helped those who are self-employed or have complex income structures. 
This is great news if you’re earning a better-than-average income, have some assets and are looking for a loan that is too big to be sold to Fannie Mae and Freddie Mac. But remember, the lowest rates are always offered on adjustable rate mortgages — loans with interest rates that are tied to an index and can float up or down. If you’re only going to be in the home for a short time, a very low interest rate ARM may serve your needs. If you’re going to be there longer, take care you don’t get caught in a loan with an increasing interest rate that you may find more difficult to refinance out of in the future. 
Contact me today for more information. 
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Boots Levinson

We are so much more than a full service real estate firm; we're a group of talented people with a passion for finding the best way of living. People who make every effort to help you live who you are.....

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