Jumbo Loans & Tips for Researching Mortgage Rates

Jumbo Loans & Tips for Researching Mortgage Rates

Jumbo mortgage loans are designed for consumers who are looking to obtain financing which exceeds the conforming loan limits set by the Office of Federal Housing Enterprise and Oversight. The limits vary in different areas of the country based upon real estate prices during the previous year. For example, the conforming loan limit for Detroit, Michigan will likely be lower than it is in a high cost area such as San Francisco, California. Both Fannie Mae and Freddie Mac restrict the mortgages that they can purchase on the secondary market based on these limits. Because Fannie and Freddie do not purchase these loans, it's up to individual lending institutions to create their own products and make them available to consumers. Several years ago, after the subprime mortgage meltdown began, there was very little appetite for jumbo mortgage loans in the secondary market which led to jumbo mortgage rates increasing substantially. Lenders were not too keen on shelling out millions and millions of dollars of 30 year mortgage debt in declining real estate environments without the ability to sell the loans. Fast forward to 2011 and there is more interest in jumbo mortgages and programs are available from a variety of lenders at much lower rates than seen in some years past.

As with conforming loans, jumbo mortgages are available as both fixed rate mortgages and adjustable rate products. Consumers looking for the lowest payments may find themselves seeking an adjustable rate product which offers a low introductory rate for the first 3-10 years of the loan. For example, a 3/1 ARM typically means that the introductory rate is set for the first 36 months of the loan, 5/1 ARM 60 months, 7/1 84 months, etc, etc. Most ARM programs are 30 year amortizing loans which begin to adjust after the introductory rate expires based upon the loans' margins, caps, and the index which the loans are tied to. Despite typically having slightly higher rates, many people feel more comfortable in a fixed rate mortgage product. Jumbo fixed rate mortgages often come in 15 or 30 year terms and the interest rate does not change during the course of the loan. A licensed and trained mortgage professional should be able to help you weigh the pros and cons of adjustable rate and fixed rate programs so that you can make a well informed decision.

There are a variety of places where you can research current mortgage rates and programs. Web sites such as ForTheBestRate.com, Bankrate.com, and BurlingtonMortgage.biz are great places to get an idea of where the lenders are currently pricing their loans. Another option is to submit a request for competing offers through lead aggregation sites such as LendingTree.com or MortgageLoan.com. They will typically sell your request to 1-4 lenders who will then offer you several financing proposals. Another option that you may want to investigate is speaking with local banks and/or credit unions. Many small direct lenders will offer competitive pricing with the hopes that they will be able to obtain your depository accounts. No matter which route you choose to take, there is plenty of information online that can help you position yourself for negotiating a great deal on your next jumbo loan.

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