So you’ve been dreaming about one of those beautiful properties that you’ve seen on television or on the internet. And why not? Everyone likes to dream big from time to time, don’t they?
But the reality is that jumbo mortgages are considered expensive: everybody knows that, right? Jumbo loans—mortgages that exceed $417,000—have historically been difficult for people to afford, since banks and mortgage companies charge higher rates on them. According to the Congressional Budget Office, that figure has traditionally been around 0.25 percentage points more than what is charged for conventional mortgages in the secondary market.
Not anymore. CNN Money reports that “in an unusual twist, lenders are offering rates on jumbo mortgages that are more than a quarter of a percentage point lower than those on the conforming loans serviced by Fannie Mae and Freddie Mac.”
In other words, it’s less expensive right now to get a jumbo mortgage than a conventional one! As the high-end housing rebounds, banks woo the largest borrowers; offering lower requirements for down payments and credit scores, says AnnaMaria Andriotis who has been in the editorial, and reporting business since 2004. She focus’s on consumer credit and banking for The Wall Street Journal.
Why?
One reason that jumbo mortgage rates are so low is that banks and mortgage companies are interested in working with wealthier clients. Banks in particular hope to be able to sell other services and products to new rich clients, but mortgage companies like the demographic as well—there may be, after all, refinances and additional real-estate purchases in the future.
While the fixed-rate jumbos are terrific deals, the seriously attractive rates are those offered on purchases in jumbo adjustable-rate mortgages. Wells Fargo, for example, is advertising a jumbo 7/1 ARM for 3.375 % as of (11/18/2016 1:58 PM Eastern).
What this means for you is that a mortgage on one of those mansions you’ve been admiring may well be far more affordable than you’ve been assuming. Want a beautiful home? Consider applying for pre approval on a jumbo mortgage—and you can go and see what is out there for you!
