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Last updated on February 2nd, 2021 at 05:54 pm
A new record low in Bankrate’s weekly survey showed the average rate of a 30-year jumbo mortgage fell to 3.44% this week.
That makes jumbo, or non-conforming loans cheaper than ever if you want to grab one now.
The reason you might be required to use a jumbo mortgage has to do with how much financing your home purchase needs, but it doesn’t actually relate directly to the sale price of the property.
A jumbo mortgage for a single-family home loan is one valued at $510,400 or more in most areas of the U.S. In more-expensive areas, the low-end threshold for a jumbo mortgage jumps to $765,600.
Whether the purchase price of your home is high or low, you’ll only need to use a jumbo mortgage if your down payment is not enough for your principal loan balance to be below the threshold.
For those looking to finance in expensive areas, we have some good news coming in 2021. On Tuesday, The Federal Housing Finance Agency said, that it’s raising the loan limits for mortgages that can be bought by Fannie Mae and Freddie Mac in 2021.
For much of the United States, the divide between conforming loans and non-conforming loan or a jumbo mortgage will be $548,250. That’s a 7.4 % increase from this year’s limit of $510,400.
Lenders usually have more stringent requirements for jumbo borrowers, not just because the loans are worth more, but because they’re also seen as riskier.
That’s because lenders can’t bundle them into mortgage-backed security sales, so they usually need to stay on the bank’s books for the duration.
Falling mortgage rates over the last few weeks have somewhat defied expectations. Most experts expect rates to remain stable this week because of the holiday, but many expect them to start rising in the months ahead.
Which means now’s the time to get a new mortgage or refinance if you haven’t done recently.
