dcsimg
   Facebook


rebuild.org finance news:

Back to Latest News Headlines

Jumbo Mortgage Loans Are Tough to Get

[Dec 4, 2009.]

 

People looking to finance a luxury home purchase usually need a jumbo mortgage loan. Although many lenders are more strict about who they will approve for jumbo mortgages, there is still money available for certain borrowers.

Mortgages That Are Super-sized

Any mortgage that is too big to be bought by Fannie Mae or Freddie Mac is considered a jumbo loan. Mortgage loans up to $417,000 are considered conforming loans, while those between $417,000 and $729,750 are considered conforming jumbo loans. Anything above that amount is a jumbo mortgage.

Because home values differ across the country, conforming loan amounts differ depending upon the location. Some of the states with the highest number of jumbo mortgage loans are Hawaii, California, New York, and New Jersey.

Who Can Get a Jumbo Mortgage Loan?

Not everyone who wants a jumbo mortgage can get one. Many mortgage lenders are requiring people to have down payments of as much as 40% of the purchase price, according to a U.S. News & World Report article. They also want borrowers to have credit scores of 720 and higher. Borrowers also should be prepared to document their income and show that they have several months of reserves in the bank.

Mortgage Rates Fall

Jumbo loans currently have some of the lowest mortgage rates ever. Jumbo mortgage rates averaged 5.88% in the week ended Nov. 27. Jumbo mortgages can have fixed or adjustable rates. But because of the tough lending requirements, many luxury homes are just sitting on the market.

Many expensive homes have had price reductions but still get no takers. Luxury homes listed at $2 million and up make up only 2% of the listings at real estate information site Trulia, but account for 25% of the $28.1 billion in home price reductions. Many borrowers either are unwilling to take out such large mortgage loans, or can't qualify with mortgage lenders.

Mortgage Refinancing Can Be Tough

Homeowners who already have a jumbo mortgage loan are likely to have a tough time trying to refinance. Back in March, 4.83% of jumbo mortgages were 90 or more days delinquent, according to statistics from First American CoreLogic.

While it is tough to qualify for a jumbo loan, some mortgage lenders are still handing out money to people with healthy incomes and stellar credit. When shopping for a jumbo loan it's important to compare all the terms and conditions, not just mortgage rates. Borrowers can begin their search for a jumbo mortgage loan here.

 

About Author:

Francine L. Huff is a freelance journalist and the author of The 25-Day Money Makeover for Women. She has appeared on a variety of TV and radio shows.

news subscription:

Easily subscribe to the rebuild.org news feed.

Read our news without even visiting our site!

Feedburner
Subscribe to our news

 

news archive:

Rebuild.org monthly news archive