Definition of Jumbo Mortgage
Jumbo mortgages are designed to help people with high income and high credit ratings make expensive real estate purchases. Lenders and real estate agents disagree on the current health of the jumbo mortgage loan market. As of mid-2009, lenders are showing signs of supporting jumbo loans once more after the housing market struggles of 2008 and early 2009. Real estate agents, on the other hand, believe the market remains troubled due to lender policies and higher interest rates.
Other People Are Reading
-
Definition
-
The United States Department of Housing and Urban Development defines a jumbo loan as a loan that does not conform to maximum limits established by lenders Fannie Mae and Freddie Mac. Those limits are between $417,000 and $730,000 depending on home prices in the particular area, according to the Wall Street Journal. Higher costs equate to higher limits.
Rates
-
According to the Wall Street Journal, as of May 2009 jumbo mortgage rates are hovering in the high 5 percent and 7.9 percent range. GMAC jumbo mortgage rates have dropped under 5 percent. Check with lenders for up-to-date rate information. Rates fluctuate daily.
-
Popularity
-
Lenders are promoting jumbo loans more vigorously in recent months. A Bank of America representative told the Wall Street Journal that they feel the time is right to pursue jumbo mortgages. GMAC Mortgage is also promoting their jumbo loans.
Market Effect
-
According to the National Association of Realtors (NAR), the limited availability of jumbo loans is slowing down the recovery of the housing market. They also report that buyers who would normally qualify for jumbo loans are making cash purchases because lenders are more likely to treat them as high risk regardless of credit score.
Future Trends
-
The NAR is lobbying Congress to cement current rules for determining jumbo loan limits. They also support the government using the Term Asset-Backed Securities Loan Facility to purchase jumbo loans, thus promoting lender competition and lowering what they describe as unusually high jumbo loan rates.
-
