Jumbo mortgage options MD DC VA
What are my jumbo loan options?
Maryland – D.C. – Virginia – Delaware
Mortgage rates in March remained close to the record lows established in January. At just under 5% for 30-year fixed-rate conventional mortgage, they are a powerful attraction as the spring home selling season gets underway.
While rates for conforming mortgages have been excellent for some months now, rates for jumbo mortgages have been another issue. They have remained at extremely high relative levels since the mortgage market meltdown in 2007. That is because, without the benefit of a guarantee from Fannie Mae or Freddie Mac, they have been difficult or impossible to sell to third party investors. As a consequence, the lender who originates the loan generally has to keep it for their own portfolio, which is less profitable than selling them to get cash for new lending. That has kept rate spreads over conforming loans, those up to $417,000 (temporarily as much as $729,750 in certain high cost areas) at 1 1/2% and up, depending on the lender and how much money they had for the program.
Rates would go up when money available became short. And, the programs’ availability was often spotty. Now, some lenders are starting to get more aggressive in that part of the market. Downpayments of 20-25% will be required, but the rate markup is being substantially reduced, to less than a percentage point. And, as with most loans these days, substantial reserves (an amount equal to six months of principal, interest and taxes seems to be the gold standard) will be required, along with excellent credit and verifiable income. Still, greater availability of jumbo loans will be great news for those buying (and selling!) in the higher tiers of the market.
Spring homebuyers should be aware of the overstressed condition of many lender/investors. The high volume of refinances has been choking the mortgage pipeline and is not likely to ease soon with the introduction of Fannie Mae and Freddie Mac’s new refi programs.
Because many mortgage lenders had pared down staff when business fell, so some are now overwhelmed, delaying the progress of mortgage paperwork. As a consequence, make sure you have a sufficiently long rate lock period in place to be certain your loan has time to get approval. The usual 30 days may not be enough. © 2009, Real Estate Information Services, Capitol Assets, & Choice Finance®