NOT NOW! That's right. The best time to refinance a jumbo loan is to wait until April 1st. Before all of you start wondering if I have fallen off of my rocker let me explain. I just received word that the conforming loan limits are going to be raised for 2008, and only 2008. The Feds have finally done something to help those people in higher cost states like California, New York and Florida to name a few.
The conforming loan limits are currently at $417,000, which for those of us in California or other high costs states, means that if you purchase or refinance a home right now, chances are it will be considered a jumbo loan (a loan over $417,000) and you will get overcharged on the interest rate.
Ah, but if you wait until around April 1st, the conforming loan limits are going to be raised to $625,000! This will only be for 2008 so this will be the year to get rid of any adjustable rates and locked in a nice 30-year fixed rate loan for a low interest rate. Let me show you a comparison.
| | Conforming Rate | Jumbo Rate |
| Loan Amount | $ 600,000.00 | $ 600,000.00 |
| Interest Rate | 5.75% | 7.125% |
| Monthly Payment | $ 3,501.44 | $ 4,042.31 |
| Monthly Savings | $ 540.87 | $ |
| 1 Year Savings | $ 6,490.44 | $ |
| 5 Year Savings | $ 32,452.20 | $ |
| 10 Year Savings | $ 64,904.40 | $ |
| 20 Year Savings | $ 129,808.80 | $ |
| 30 Year Savings | $ 194,713.20 | $ |
The above chart is based on a refinance or purchase. You must provide full documentation, have a loan-to-value ratio of 80% or less, owner occupied, single family residence, no impounds, and a FICO score of 720 or above to qualify. Sorry, but we have to disclose the legalese bla bla bla stuff. This isn't a commitment to lend, bla bla bla.
If you take a loan of $600,000 out today, it will be considered a jumbo loan. At today's rate of 7.125%, it gives you a payment of $4,042.31. If you wait until the conforming limit is raised, you now have a payment of $3,501.44, or a monthly savings of $540.87! That means in 30 years, you will have saved almost $200,000 by waiting 2 months or so to refinance or purhcase.
So could you use an extra $194,000?
;)
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