Jumbo loans get cheaper

Here’s an interesting blog post in the Wall Street Journal today about Jumbo loans (loans over $417,000).  The general consensus is that rates will come down on Jumbo loans, helping to move homes in the $417,000 plus range. Although credit will be extended to those only with at least 20% down up to $1 million and 30% down up to $2 million and required credit scores will be higher.

The problem I foresee is that most people that can afford homes in that price range are signing the front of people’s paychecks, not the back, and therefore don’t have traditional documentation such as paycheck stubs and W2’s to provide income documentation for the Full Doc loans, which pretty much is all there is these days.

Here is what the author of the blog post has to say:

“The average rate on the 30-year fixed-rate jumbo loan reached 5.76% at the end of April, according to HSH.com, a financial publisher.  That’s near the previous record low of 5.55% from 2003.  Mortgage bankers say that five-year adjustable-rate mortgages are available at rates nearly a percentage point lower. (Meanwhile, average rates on conforming loans fell to 5.02% last week, from 5.08% one week earlier, according to the Mortgage Bankers Association).

“More lenders are starting to ‘get it’ and are coming to the table with more aggressive pricing,” says Alan Rosenbaum, chief executive of New York City brokerage Guardhill Financial Corp. He says that both prices and product offerings have improved from one year ago.”

Read the full blog post here.

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