Jumbo Loans are Back with a Bang to Fuel the Luxury Real Estate Market
by Selena Cowell
Is the luxury real estate market on the mend? Home sales and prices are gradually rising in those places where the wealthy would like to plant their mailboxes–such as Chicago’s North Shore, the San Francisco Bay area, the haute Hamptons and the Rancho Santa Fe and La Jolla areas near San Diego.
According to recent reports, national sales of properties in the $75,000 and $1 million range are up by 38.7% compared to a year ago. Meanwhile, properties priced over $million are up by 25.7%, according to the National Association of Realtors. The good news is that the luxury real estate market is being driven by another resurgence–the jumbo mortgage loan.
These loans are typically over $417,000, the usual limit for qualifying by agencies like Freddie Mac and Fannie Mae. Jumbo mortgage loans are gradually coming back to the market after they all but disappeared in the wake of the credit crisis of 2008. Although most lenders had stopped making new jumbo loans, they’re back in the market again.
Presently, the credit markets are comparatively stable and the lenders who lend such big loans to the most efficient homebuyers now see that jumbos are one of the most profitable ways of making money with the low cost deposits. The secondary market investors are starting to regain their taste for the high-yielding loans. The jumbo mortgage loans are being offered at interest rates that are barely higher than those offered by the conventional mortgage loans.
If you’re about to take out a jumbo mortgage loan, you should first calculate ‘mortgage how much can I borrow‘ before striking the final deal. The jumbo mortgage market might fare better than the overall mortgage market throughout 2013.
If income and/or assets are no barrier, you should have no diffiulty in finding mortgage loans up to $10 million-or more.