The larger the mortgage, the riskier the loan.
The riskier the loan, the tougher it is for a home buyer to get a mortgage approved.
That is a basic lending rule of thumb and it appears even federal government intervention can do little to quickly change that fact.
Months after the Economic Stimulus Act of 2008 temporarily raised the maximum amount on a conventional conforming loan from $417,000 to about $730,000, risk averse lenders have not been convinced to substantially lower interest rates on the larger loans.
The conforming loan adjustment was supposed to generate more affordable interest rates on the larger, so-called "jumbo conforming" loans. The hope was that the larger jumbo conforming loans would have nearly the same interest rates as the old conventional conforming loans.
Then, as the theory went, the lower rate on the larger loans would have encouraged more consumers to buy homes, or enable them to refinance to lower interest rate loans, especially in high-cost regions like California.
That has not happened. Yet...
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Economic Stimilus Package- Can you get a loan???
I found this article very interesting and on point in today's mortgage market. despite the economic stimulus package. Can your clients obtain a loan to buy the home they want???
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