First Mortgage loans above the conforming lending limit purchased by Fannie Mae & Freddie Mac are considered jumbo. For the past several years that amount has remained $417,000.00. During most of that time the rate premium for jumbo loans have been a slight increase over conforming loans.
Because jumbo loan have not been performing well in the current mortgage environment, many lenders have shyed away by raising rates & widening the margins between conforming & jumbo to discourage this loan business. Especially true with high Loan To Values (LTV's) above 80%.
Temporary increases to FHA lending limits may now exceed conforming loan limits providing the advantages of lower FHA rates for jumbo loans. For Cook & Dupage counties (IL) FHA loan limits have increased temporarly up to $410k and you may have an existing 2nd mortgage behind FHA loans.
Splitting a jumbo loan into 1st ($417k conforming max) (FHA varies by county - $410 cook & dupage) & 2nd may save interest & (now deductible) mortgage insurance expense. While reductions to prime have no direct link to 1st mortgage rates HELOC 2nd's have benefited and are available for up to $500k @ -1% below prime.
If you have an adjustible jumbo loan nearing recast, consider taking advantage of this opportunity before FHA limits drop back down or conforming rates rise with increased concerns about inflation.
Note: FHA is capped @ 30yr amortization & Conforming up to 40yr
FHA does not offer interest only but conforming does
FHA does not offer stated income but conforming does (w<80% LTV)
Jumbos generally limited to 80% LTV Conforming 1st & 2nd 90% CLTV
FHA goes up to 97% purchase/95% refinance higher, if your current 2nd agrees to resubordinate behind new 1st.
Greg Zaccagni @ www.MortgageAdvisor.info
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