If you are looking at buying a (big) home and possibly financing it with a jumbo loan, this may be your lucky day if you have documentable income and a good credit score…
Interest rates on jumbo loans are at their lowest levels since 2003.
So for those borrowers who are shopping for houses that are above the conforming loan limit that have a good job, good income and a healthy down payment – you are about to save a lot of money each month on the amount you finance in interest.
According to the WSJ:
Just a year ago, the average rate on a 30-year jumbo mortgage—a loan of more than $729,750 not backed by government-sponsored agencies Fannie Mae or Freddie Mac—was 6.86%, according to Greg McBride, a senior financial analyst at Bankrate.com. Now it is 5.48%—a rate that rivals those available during the height of the credit bonanza.
“In just the past couple of months, jumbo loans have really started to be competitively priced,” says Keith Gumbinger of HSH Associates, a publisher of consumer-loan information.
The recent low rates on jumbo loans has caused an uptick in refinancing activity – with some jumbo lenders reporting that jumbo refinancing up as much as 50% vs. what it was last year.
How Much Can You Save?
The more money you borrow, the more you can save when it comes to reducing your interest rate. For larger loan amounts, it isn’t uncommon for borrowers to save thousands on their monthly mortgage payment simply by reducing their interest rate a point (or two!).
A simple example used in the WSJ article pointed out that for a homeowner with a 30-year fixed-rate $800,000 mortgage at 6.86% pays $5,247 a month. If he were to refinance at 5%, his monthly payments would be reduced by $952.
Jumbo Lenders: Harder To Find
It used to be that you could throw a rock and hit 3 subprime mortgage brokers, 1 FHA mortgage broker and 1 jumbo mortgage broker – all with the same rock on the same throw. But as industry regulations have tightened up and mortgage loan officers have been reduced in numbers, finding a loan officer who has experience with jumbo loans may be tricky.
A few good places to start to look is at the bank where you currently bank to give you an idea of what is possible – and then to follow up with a Realtor who can give you a recommendation of a great loan officer who works at a mortgage bank in your local market. The difference will be that your current bank can offer you their products and the loan officer at the local mortgage bank can usually offer you mulitple banks jumbo products.
But no matter where you get your jumbo loan, one thing is certain:
Rates on jumbo loans haven’t looked this good since 2003.