How to Know if a Jumbo Loan is Right for You – Boston Jumbo Loan Update

Jumbo loans are loans that do not meet Fannie Mae and Freddie Mac’s conventional conforming loan limits. Fannie Mae and Freddie Mac purchase loans from banks and other lending institutions to free up funds so lenders can write more loans. As of October 1, 2011 the government’s new limit is $625,000 or 125% of the median home value of comprisable homes. Any loan that goes above these limits is considered a jumbo loan. For example in 2009 the median house value in Boston was $375,700. In nearby Newton it was $685,400. This is the base price a lender would use to write a conventional
conforming loan. But if a home is valued above the median price in a Boston neighborhood, your best option is a jumbo loan.

Boston Jumbo Loan

Image by Wikipedia

Rates for jumbo loans in the Boston area are very competitive. A potential homeowner can get a jumbo loan with excellent rates at the moment in the Boston area depending on their credit score. A jumbo loan is not without risk for the lender. Since the loan is not backed by any federal institution the risk is carried solely by the lender, this is one of the reasons the interest rate is higher. But their popularity is helping to narrow this gap. As the housing market recovers more lenders are opting to write jumbo loans.

Criteria for a jumbo loan are also strict for borrowers. Some banks and lenders will not write them for anyone with a credit score lower than 680 and a down payment of less than 25% up to $3 million. If you are looking to purchase a high value home, a jumbo loan may be a wise choice. You will get the money you need and be able to finance your new home. A loan officer can help you find the jumbo loan which is right for you and your financial situation. Of course, don’t be turned off by raised eyebrows at one lender. A creative lender will often have creative loan solutions.

Phil Ganz (354 Posts)

Philip D. Ganz is a Boston Mortgage Broker and Boston Home Loan specialist. For information, expertise, consulting, or advice about home loans, refinancing mortgages, or commercial property loans, contact Phil with no obligation: 617-529-9317

Sorry, comments are closed for this post.