Jumbo Mortgages Get Cheaper Than Other Mortgages

from Realtor.com

Jumbo Mortgages Get Cheaper Than Other Mortgages

Jumbo Mortgages Get Cheaper Than Other Mortgages

DAILY REAL ESTATE NEWS | WEDNESDAY, NOVEMBER 13, 2013

In an unusual move, jumbo mortgages are becoming a bigger bargain over conforming loans.

Lenders are offering jumbo mortgages at lower rates -- more than a quarter of a percentage point -- than conforming loans that are backed by Fannie Mae and Freddie Mac, CNNMoney reports.

“The government-run agencies require conforming loans to be below $417,000, unless they are for homes in high-cost areas like New York or Los Angeles,where the limit is $625,500,” CNNMoney reports.

Generally, banks charge higher rates on jumbo mortgages, typically about a quarter of a percentage point more than conforming loans, according to the Mortgage Bankers Association. But recently that has reversed.

For example, Wells Fargo is offering a 30-year jumbo mortgage rate this week at 4.125 percent. In comparison, it is offering a 30-year fixed-rate conforming mortgage at 4.5 percent. US Bank is offering a jumbo mortgage rate for 3.875 percent, compared with 4.25 percent for a conforming loan.

"Never in my memory have jumbos been such a bargain," Peter Grabel, a loan officer at Luxury Mortgage Corp. in Stamford, Ct., told CNNMoney.