Refinance: Getting the Big Loans

The Washington Post reports:

The gears of the mortgage market are starting to unlock for borrowers needing big loans. Last week, for example, BB&T was offering 30-year, fixed-rate mortgages for a conforming loan, which is for $417,000 or less, at 6 percent interest with no points, a type of prepaid interest. A conforming jumbo cost only one-quarter of a percentage point more, 6.25 percent. Loans for amounts beyond $729,750, now called "jumbo jumbo" loans, were at 7.25 percent.

Before you jump on one of these loans, though, check out FHA mortgages. Insured by the Federal Housing Administration, these loans are available for as much as $729,750, the same cap as on conforming jumbo loan amounts.

Last week the interest rate on an FHA conforming jumbo was an attractive 6.38 percent.

Major housing legislation that’s being debated in Congress would make permanent the higher loan limits for both the conforming jumbos and the FHA program, with annual revisions as home prices change. Beginning June 1, Fannie will again accept mortgages with as little as 3 percent down.

Officials at Freddie Mac announced that loans with 5 percent down or less can still be made in declining markets if the loan is for a single-family home that is the borrower’s main residence, and the borrower has good credit. Fannie and Freddie, government-chartered corporations that purchase mortgages and repackage them for sale to bond investors, cover a huge portion of the mortgage market, and so their standards influence the whole industry.

("Jumbo jumbo" hardly reflects the work of a suave marketing team.)

What’s a "conforming loan," anyway? Until very recently, the new conforming jumbos were orphaned by the market. That changed a few weeks ago when Freddie Mac, under pressure to do more to help stabilize the mortgage and housing markets, announced it would buy between $10 billion and $15 billion of the new conforming jumbo mortgages from major lenders such as Wells Fargo Home Mortgage, Chase, CitiMortgage and WaMu.

About Luke Ford

Raised a Seventh-Day Adventist at Avondale College in Australia, Luke Ford moved to California in 1977. He graduated from Placer High School in 1984, reported the news at KAHI/KHYL radio for three years, attended Sierra College and UCLA, was largely bedridden by Chronic Fatigue Syndrome for six years, and converted to Judaism in 1993. From 1997-2007, Luke made his living from blogging. Living by Beverly Hills (, he now teaches the Alexander Technique (moving the way the body likes to move). Lessons cost $100 each and last about 45 minutes. In 2011, Luke completed a three-year teaching course at the Alexander Training Institute of Los Angeles. His personal Alexander Technique website is Luke is the author of five books, including: » The Producers: Profiles in Frustration » Yesterday’s News Tomorrow: Inside American Jewish Journalism
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