A jumbo loan is a loan larger than the conforming loan limit set by Government Sponsored Entities(Fannie Mae, Freddie Mac, etc.) Typically the highest loan amount for a conforming loan on a single family residence is $417,000. Historically, the rates offered on Jumbo mortgages are about .5% higher than those of conforming loan amounts.
The market for Jumbo loans has been improving of late. According to Inside Mortgage Finance, lenders doled out $38 billion in Jumbo Mortgages during Q2 2012 which is up 65% from a year earlier. This is the best quarter since Q1 2008. Demand for Jumbo Mortgages has gathered from an increase in luxury home sales. According to the National Association of Realtors, sales of $1 Million plus homes rose 19% in July from July 2011. The spread between conforming and jumbo rates is currently about .5% which is significantly less than it was just a few years back.
As with conforming mortgages, Jumbo Mortgages come with a variety of options, including both Adjustable Rates and Fixed Rates. Earlier I mentioned the increasing demand for Jumbo Mortgage products, as a result of this, more and more investors are offering larger balance loan products and we are starting to see options (lower down payments for one) for Jumbo mortgage borrowers that have not been available for the past 4-6 years.
to see if a Jumbo loan makes sense for you. If you would like to speak with a qualified Loan Officer regarding Jumbo Mortgages call us 800-641-1715