Lots of people don’t understand what a Jumbo loan is unless they have had to borrow more than $417,000 to purchase a home. When the housing market went south a few years ago, trying to get a jumbo loan was next to impossible as lenders didn’t want to get caught holding the bag on an expensive hard to sell property, but now that the market is recovering jumbo loans are easier to get and for the FIRST time in our history, cheaper. Lenders typically charged an additional 1/8 to 3/8 of a point to the going interest rate to get a jumbo loan. For all of you who want to know more, read on……
Jumbo loans cheaper than conventional for first time
NEW YORK – Sept. 6, 2013 – For the first time ever, interest rates for jumbo mortgages have dropped below the average rates for conforming mortgages, lenders say.
The average interest rate for a 30-year fixed-rate conforming mortgage last week was 4.73 percent while the average for a jumbo 30-year fixed-rate mortgage was 4.71 percent, according to the Mortgage Bankers Association.
“In my 30-year career, I’ve never seen nonconforming loans priced below conforming loans,” says Brad Blackwell, executive vice president of Wells Fargo Home Mortgage. Typically, rates for jumbo mortgages run at least 0.25 percentage points above rates for conforming loans. In 2008, jumbo mortgage rates peaked at 1.8 percentage points above conforming rates, according to HSH.com data.
“I’ve had situations where I’ve told clients, ‘You don’t need to borrow within the [conforming] limit. I can get you a lower rate if you borrow a little more,’” said Rolan Shnayder, director of new-development lending at H.O.M.E. Mortgage Bankers in New York.
Jumbo mortgages are those that exceed the $417,000 limit to qualify for backing by mortgage giants Freddie Mac and Fannie Mae. The limit may be lifted to $625,000 in some high-cost markets, such as New York and Washington.
Source: “‘Jumbo’ Mortgage Rates Fall Below Traditional Ones,” The Wall Street Journal (Sept. 4, 2013)
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