Mortgage Update: Jumbos Remain Elusive
At a time when some mortgage products are showing signs of life, jumbo mortgages are hard to get and expensive, making it difficult for many would-be move-up buyers to take action. What to do?
Since the credit crunch hit about two years ago, many lenders have all but abandoned jumbos, which are too big for secondary mortgage market companies Fannie Mae and Freddie Mac to buy for packaging into securities and outside the limit of FHA. Yet with their reluctance, lenders are leaving money on the table, say analysts and professionals in the lending community.
A study by the NATIONAL ASSOCIATION OF REALTORS® released in mid-May shows that the supply of homes for sale is stabilizing in many markets, a sign that steeply discounted home prices are attracting buyers looking for bargains. Yet when higher-cost homes that would require jumbo financing are looked at separately, the supply rises dramatically, and in May, it stood at about 40 months.
The near-absence of lenders means a jumbo borrower, even one with stellar credit, pays a significant premium above what conforming-loan borrowers pay, even those with far poorer credit record. NAR Chief Economist Lawrence Yun, speaking with two jumbo mortgage lenders at NAR’s meetings in Washington last month, said if more lenders were to venture into the jumbo market, these buyers could help lift home sales, shore up prices, and, in turn, strengthen the broader economy. Full Story.
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