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So for in 2009 the industry once booming known as the mortgage industry has seen the lowest interest rates in 50 years and on top of that the government has given unprecedented first time home buyers tax credits up to eight thousand dollars just to buy. Just the fact that refinancing is showing some signs of life with long term mortgage rates such as the 30 year fixed home loan in the 4.5% range is an important sign we're at a turning point in economic recovery. Jumbo mortgage rates are loans that go beyond the limits of a conforming also known as fannie mae mortgage. Those limits are set by Fannie Mae and Freddie Mac. The maximum loan size is $417,000 for a single family residence which is quite often below the median loan amount in most areas especially in California. The conforming jumbo was created to address this issue and goes up to about $729,000 in some counties. Before the housing market collapsed the difference between Jumbo rates and conforming mortgage rates was as low as .25%. THe difference now is big, almost 2 1/2 percent. Without the good old portfolio lenders like World Savings, remember them, Jumbo loan availability has dwindled as the risk involved dries the ink out of the underwriters approval stamps. Jumbo mortgage loans were already consisdered high risk previous to the market collapsing. Today, this risk is shown in the high mortgage rates. Even though banks gain cash as scared investors put their cash into FDIC insured savings accounts credit remains super tight. The rise in refinance applications on conforming mortgages is just another result of lower interest rates and we can only hope that soon the government takes bold moves to lower the rates and increase the available credit on the once prosperous true jumbo loan. With most of the old jumbo loan lenders out of business except for a few it's more important than ever for a homeowner to be tedious in their search for a jumbo mortgage.
You don't want to take the first bank that will approve you. Though it might take some research and shopping on part of the homeowner, more than usual, field a few competitive offers and negotiate just as you would in the flowing credit market. You may be suprised with what good rate you can find depspite the negative news surrounding the credit market in particular the mortgage industry.
Copyright (c) 2009 Edward Ferrara
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