Jumbo loans in the spotlight…

Why Are Jumbo Loans Getting So Much Attention?

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Money bagsJumbo 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 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

First of all, it’s not that often that consumers will 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. Today’s lower rates give loan officers all the reason they need to call on former borrowers and business partners.

Why are rates lower now? Part of the reason is that most lenders are starting to get desperate for loan volume. Interest rates have been low long enough that it’s getting hard to find homeowners who can still benefit from refinancing their loans. In October, the Mortgage Bankers Association reduced its estimate for the industry’s 2013 loan volume a second time, estimating total originations for the year at $1.7 trillion. That’s down from more than $2 trillion in 2012.

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Author: kimhuntkw

We specialize in Real Estate in the Pleasanton, Dublin and Livermore areas of the East Bay in California

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