Jumbo purchase loans are available and ready for you to use in order to buy your dream home. When the recession first hit many lenders were worried about the risk of issuing Jumbo loans that could not be sold on the secondary market. As such funding for home owners in more expensive areas was very difficult to come by. Jumbo loans are not insured by the government so the bank issuing the loan was also holding onto the risk.
Recently money for jumbo loans has become more readily available. This is in part due to the low default rates in this category. Jumbo loans are the only new loans on the market since 2010, without government backing, that have been securitized. In January Redwood Trust Inc. sold $1.1 billion of jumbo backed bonds. They have had zero, yes that is zero, default in any of the $4 billion in jumbo loans they have packaged and sold since 2010.
This is fantastic news for borrowers of Jumbo loans. As the market continues to show low default rates more lenders are willing to take the plunge and offer jumbo loans to home owners.
Jumbo Loan Benefits
• Loan balances over $417,000
• Fixed rate and ARM loans
• Low interest rates (around 3.891% APR for 30 years as of February 12, 2013)
• Typically under 80% loan to value
• Single family homes
• Owner Occupied
Speak with a mortgage lender to discuss various jumbo loan programs and determine which one is right for you. With interest rates so low now is a fantastic time to purchase your dream home. Borrowing funds at less than 4% for 30 years means that purchasing the home you have always wanted may be easily within your reach. As an example a $1.5 million dollar home purchased with 20% down, at 3.9% for 30 years, would have a monthly mortgage payment of $5,660. That same loan at a higher rate of 5.5% would have a monthly payment of $6,813. Since jumbo loan amounts are so high, changes in interest rates make a significant impact on the monthly mortgage payment. A 1.5% increase in interest rates on a $1.2 million dollar loan is over $1,000 extra each month, or over $12,000 a year! This savings could be enough to pay for private school, buy a new car, or put money away into retirement funds.
Home values are trending upwards and December showed the highest gain since 2006 at 8.3%. This is great news for current home owners but puts pressure on people looking to purchase a larger, more expensive home. Interest rates have been going up for the past couple of months, and when combined with rising home values, makes now the time to pull the trigger on purchasing your dream home before it gets financially prohibitive. Experienced mortgage lenders can provide you with a consultation to go over various jumbo purchase loan options so that you can make a decision for your long term financial health.
