Jumbo Loans Cheaper than Conforming Mortgages

The crisis from 2008 and 2009 seems to have turned things upside down in the mortgage market. Currently, the jumbo loans come with lower rates compared to the conforming loans. This was last seen some twenty years ago.

The jumbo loans are home loans exceeding $417,000 in the majority of US states and exceeding $625,500 in New York, Washington D.C. and California. They are regarded as non-conforming loans due to their large principal amounts. In the past, they were considered only by people with high income looking for luxury properties, but due to their growing affordability, they have now become a popular choice with more home buyers.

Right now, the rate on a conforming 30-year fixed rate mortgage offered by one of the leading lenders in the country is 4.625%. For comparison, the rate on the same type of jumbo loan is 4.25%. The difference of 0.375% may not seem very significant, but it can generate considerable savings over the long term. At the same time, a jumbo loan offers more finance for purchasing a larger and more luxurious home.

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One interesting fact is that the difference between the rates on jumbo and conforming 5-year adjustable rate loans is the same – 0.375%. While the interest rate on the conforming loan is 3.375%, the one of its jumbo counter par is 3%. In general, the number of adjustable rate jumbo loans as grown dramatically from the end of 2012 to the end of 2013. Those with principal between $417,000 and $1 million rose by the remarkable 9%.

The lower interest rates, the recovering property market and the growing market for jumbo loans are all factors making these non-conforming mortgages more attractive to home buyers. They are now preferred not only by wealthier buyers, but by a growing number of first-time home buyers and people with foreclosure or bankruptcy in their credit history.



Mailynne serves as a content strategist and writer for mortgage.info. She is ahighly task-oriented strategic planner and experienced writer. Over the past 10 years, Mailynne has managedcontent for both large corporations, non-profits and businesses. She specializes in managing digital marketing,branding and web development content. Mailynne has worked with a variety of local, national and international organizations.

Contact: mailynne@mortgage.info

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