Jumbo Mortgage Loans are Back
Jumbo loans are a special category of home mortgages that are much bigger than the typical or average home loans. Those who buy more expensive homes – like those that cost upwards of $750,000 or so – often have to use a jumbo loan because conventional loans or standard everyday loans are not made in such large amounts of money.
The size of a jumbo loan changes from time to time, based on the housing market and other financial industry factors. A few years ago, for example, the most you could get with a conventional loan was about $450,000 and if you needed more than that you had to qualify for a jumbo mortgage. Now the limit is up around $730,000 because home prices have trended higher over the past 10-15 years. But if you want to buy a house that costs $730,000 or more you will most likely need a jumbo loan, and lots of homes these days sell in that upscale price range.
During the height of the mortgage crisis the market for jumbo loans almost disappeared because lenders were afraid to loan such large amounts and investors who make these kinds of loans pulled their money back for safekeeping. If you could find a large jumbo mortgage during that phase, the interest rates were exorbitant, sometimes two or three hundred percent higher than a conventional loan. So the sales of high-priced homes came to a screeching halt because buyers could not get financing.
Now the situation is finally starting to normalize again for jumbo mortgages, however, and home loans in the top dollar category are again being offered at reasonable prices with competitive interest rates. That spells good news for both buyers and sellers of luxury homes or properties in very expensive locations like Hawaii and parts of California and New York, and is another sign that the mortgage and real estate markets are recovering.
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