A jumbo loan is a mortgage of $417,000 or more. So if you are making a 20% downpayment, that means that you will need a jumbo loan to buy a house that costs more than roughly $520,000. If you live in California or if you just want a relatively nice house somewhere else, this means you.
First, let's say that if you don't have a 20% downpayment, current market conditions mean you probably won't get a loan at all.
Regular loans are packaged and sold to Fannie Mae and Freddie Mac. Jumbo mortgage loans are packaged and sold in the secondary market. Right now, there is no secondary market for these types of loans and little funding for institutions keeping the loans on their own books. Many lenders have decided not to make these loans and others have increased their rates (Wells Fargo jumbed from 6.75% to 8% per annum.)
Most real estate agents and mortgage brokers don't even know about this yet. It is happening at the top of the mortgage companies and borrowers may not learn about it until they are sitting at the closing table and the loan has not yet been funded. Don't be surprised.
Lock in a rate. Lock in funding now. Or better yet, wait to buy that house until the price drops. Oops, then the interest rate and your payments will be higher. Either way, if you want to buy, the cost just went up - if you can get the loan.
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