The Return of Jumbo Mortgage - April 2009
By Ursula Christiansen

Jumbo mortgages became more expensive and harder to come by as the nation's
credit crisis deepened. That might be starting to change.

"Jumbo" refers to mortgages that are too large to be bought by Freddie Mac or Fannie Mae. The "conforming loan limit" for those government-backed entities is $417,000 in many parts of the country, but goes up to $729,000 in high-cost areas of the continental United States.

What you need to know if you think you're in the market for a jumbo mortgage, consider the following:

Do you really need a jumbo? Don't automatically assume that your mortgage will exceed the conforming loan limits says Cameron Findlay, chief economist of Lending Tree. As home prices have fallen, and the U.S. has raised loan limits in some areas, more home buyers probably need conforming mortgages.

Some people who are looking to refinance and who originally needed jumbo loans may also fall within the increased loan limits.

With a conforming mortgage, you will likely get a better rate.

Availability may be increasing, but requirements are still stiff. Bank of America jumbo loans, for example, require at least a 720 credit score and a 20% down payment (or 20% home equity on a refinancing).Borrowers need to have at least 6 months worth of reserves in the bank.

Search widely for deals."Borrowers need to shop around for any mortgage, but particularly for Jumbos ,"Mr. Cecala says. A small local lender or credit union may have a good deal, but you won't know unless you do your homework.

Compare apples to apples. Lenders often talk about their products in terms that don't allow you to easily compare with other lenders, make sure to draw fair comparisons that consider mortgage fees and costs.

Write to Ursula@visitchristiansen.com

Ursula Christiansen
Owner/Broker