It's a shame that a great idea can sometimes be dragged down by others.

Yes, I'm still touting Jumbo Mortgage  Rates.

Here's a synopsis of what happened.

• Tuesday, May 6th: Fannie announces to that they are going to enable lower interest rates for Jumbo Mortgages - pushing them closer to Conforming Loan Rates.
• Wednesday, May 7th:  Fannie did just that.  Jumbo Mortgage Rates dropped significantly.
• Thursday, May 8th:  Lenders are reporting, as expected, an increase in Jumbo Mortgage Locks. 

However, upon closer inspection, those Lenders are reporting today that the loans that were locked were also a "bit higher than the prevailing interest rate".

Let me decipher that for you

(I'm using all hypothetical numbers and rates just for clarification)

You applied for a loan a couple of weeks ago with "Loan Officer Larry".  At that time let's say Larry quoted you a real interest rate for your Jumbo Mortgage at 6.75%

Yesterday Larry called you.  He was out of breath, excited, and could hardly contain himself.  He told you he locked your loan not at 6.75%, not at 6.5%, but all the way down to the unbelievable rate of 6.0%!

Can you believe it?  That Larry, what a great guy!

Here's what really happened

Rates did drop.   They dropped significantly.  But they dropped much more than Larry told you.  What Loan Officer Larry did was give you a partial break and pocket the rest in the form of Yield Spread Premium.  That's a fancy word for putting cash in his pocket.

According to the lenders, Larry made a lot of money yesterday.

How do you feel about  Larry now?  Did you get LOL'd?  Sorry about that.