In recent years as credit standards have tightened on mortgages and many home loan products have gone away, with more than a few for the good, jumbo home loans have become more difficult as well. However, it now appears that this trend is being reversed as jumbo mortgage are starting to make a comeback with both lower interest rates and higher loan to values available.
A jumbo mortgage is anything over the conforming loan limit for that geographic area, which currently sits at $417,000 for all areas of the country that are not considered high cost. Here in Arizona, that represents the majority of the state and all of the Phoenix and Tucson metro areas.
These types of mortgages are not insured by Fannie Mae or Freddie Mac, like conventional loans and are not government insured mortgages like FHA and VA loans. Therefore, as the mortgage market went through a turbulent time the past few years these types of mortgages became more expensive and even more restrictive.
However, jumbo mortgage loans are finally starting to make a comeback so to speak as interest rates on jumbo loans are still a little higher than the rates for conventional loans, but they have continued to decrease as mortgage rates near all time lows. This means that not only is affordability available for buyers purchasing or refinancing less expensive homes, but also higher priced homes as well.
In addition, while you will still need to have a larger down payment to obtain a jumbo home loan for the purchase of a home or more equity for the refinance of a home, typically at least 20%, that number has come down and made jumbo financing easier. That is because recently the loan to value ratios, the amount a lender will lend in relation to the value of the home, has increased.
What this means is that slowly, but surely jumbo mortgages are again becoming more viable options for homeowners purchasing higher priced homes or existing homeowners who are looking to take advantage of lower interest rates and refinance.
This is a good sign for the mortgage market in general as the new changes are not radical, but certainly will open up good options for certain buyers or current home owners in need of jumbo mortgage financing.
For more information on current programs for existing and potential homeowners, please contact Bill Kamboukos of Strategic Mortgage at (480) 219-3682 or by emailing: firstname.lastname@example.org or online at www.strategicmtgaz.com