Friday, August 26, 2011

New Definition of Jumbo Mortgage will mean Higher Mortgage Rates for Some

Home loans above $625,500 in high-cost areas will be considered "jumbo" mortgages after Sept. 30, and will carry a higher interest rate than so-called conforming loans below that threshold, reports SFGate. Right now, the jumbo loan cutoff in many high-cost areas is $729,750.

Conforming loans are mortgages that are eligible to be purchased by Fannie Mae or Freddie Mac; they typically carry lower interest rates than nonconforming, or jumbo, loans.

Rates for jumbo loans are about 0.5 percent more than those on conforming loans, but at times the spread has been even greater.

Banks typically take at least 30 days to fund mortgages, which means the effective cutoff date for people to apply to refinance or purchase loans at the current, cheaper rates is Aug. 31.

1 comment:

  1. Thank you helicopter Ben!

    Over the life of my loan (3 1/4 years) I have re-fi'd 8 times now (inbank loan modification, nommial costs)! The re-fis, after this final (?) one today will have saved over 500K over the life of the loan. Every time rates dropped it was economically worth it...about a 14% rate of return just for a 1/8% drop.

    See, he's good for something!