The Return of the Jumbo Loan?

To say it has been difficult to buy (or keep) a home in the last year or more is an understatement. If the neighborhood you live in, or are looking to live in, falls in the jumbo loan price range the difficulties have been even greater. The banking crisis has certainly taken its toll on Americans. Many luxury homes in nice areas have become completely out of reach, because many banks are no longer offering non conforming loans. This is particularly the case in areas of California, Florida, and the Northeast. Do not despair; the trend may be changing.

In the last year, if you could find a bank that would offer a jumbo loan, the terms would have been virtually impossible. Down payments of up to 40%, loan terms of 5 years, and interest rates in the 7% range. If you thought you might refinance your existing loan as interest rates lowered, you probably found yourself sorely disappointed. As more people pull their money out of Wall Street to place it in safer banking options, banks find themselves with new money to invest and loan.

Several, better known banks have chosen to re-open the jumbo loan market with this new influx of money. Today it is possible to find a bank that will offer a non conforming loan with a 30 year term and a fixed interest rate in the high 5% range–not too shabby! The loan may be difficult to qualify for, but the trend is hopeful.

If you choose to seek a jumbo loan, expect to need; a 20-25% down payment, a credit score in the 700 range, and six months’ payments in liquid assets to qualify. If you are in the market, like with anything, be sure to shop around. Not all banks have recovered from the banking crisis sufficiently to offer better terms and loan rates, but a few have. Seek help from the proper sources and you may find yourself in your dream home in a neighborhood you feel good about.

Here’s a good video about the jumbo loan financing situation: