Luxury Homes More Affordable with Decline In Jumbo Loan Interest Rate
Posted by TheHomeCart.com on Sunday, April 5th, 2009 at 9:16am.It might become easier to buy a house worth $1 million or more, writer Prashant Gopal reported on BusinessWeek.com, because rates for jumbo mortgages could fall to more affordable levels.
The average interest rate for a jumbo loan has dropped from a high of 7.9 percent at the end of October to 6.6 percent. That is the lowest average rate since the end of 2007, according to financial publisher HSH.com in Pompton Plains, N.J.
The underwriting requirements, however, are strict. Borrowers typically need a down payment of at least 20 percent, a credit score of above 720, full financial documentation, and at least six months of cash reserves. In some markets, the down payment requirement is as much as 40 percent.
Declining interest rates for jumbo loans is especially good news for qualified borrowers in expensive markets such as Boston, New York, and Washington and in states such as California and parts of Florida where many homes require loans larger than those Fannie Mae, Freddie Mac, and the Federal Housing Administration are permitted to buy.
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