Jumbo loan rates may leave you with more questions than answers. Exactly what is a jumbo mortgage, who would get one and why? Where did the name jumbo loan originate and are these type of rates different than other types of loans?
Any type of loan that is bigger than what is generally considered a normal type of conventional loan is termed a Jumbo mortgage loan. You may have heard it referenced in the past as a California loan due to it’s wide use there to purchase expensive real estate before the recent housing bubble sent home pricing soaring.
Conventional conforming loans in the $417,000 (or $625,500 in Alaska and Hawaii) as set by Fannie Mae and Freddie Mac are typical loans and jumbo loans are those loans considered above this amount. However, the recent economic stimulus package temporarily increases the conforming limit to $729,750 until December 31, 2008.
Jumbo mortgages, usually associated with very high priced homes, also carry rather high jumbo loan rates as well. These rates can differ only due to the amount borrowed to purchase the home as and such the rates are higher and fairly hard to get. A mortgage interest calculator can help you determine the total cost of these type of loans.
Jumbo type loans are typically made to people with higher income brackets, good credit and good assets. These are usually people who have owned homes before, and are considered good credit risks.
There are any different types of jumbo loans just as there are with smaller loans. They can be adjustable, fixed rate and hybrids and the loan to value rate can be as high as 100% depending on your financial situation and credit rating. Consequently Jumbo loan rates can vary widely based on what type of loan you are getting.
Will you be stuck with a jumbo payment getting that jumbo loan? Loan rates are as low as they have been in years but the short answer is probably yes. A mortgage interest calculator can tell you for sure.
Jumbo loan rates can typically run anywhere in the range of .125% to .75% and sometime higher depending on the terms of the loan. Although higher in term of interest paid, those who purchase a jumbo loan can typically absorb that cost. Most prefer putting down a larger down payment when getting their home loans which saves them a great deal of money.
When considering jumbo loan rates your best bet is to get online and use a free mortgage interest calculator to determine if this type of loan is best for you.