Borrowers who want to trade up or move to expensive real estate markets will find that the jumbo mortgage market has been loosening up a bit. Jumbo mortgages are typically above $417,000, or $625,000 in pricey real estate markets such as Manhattan and parts of California.
The Wall Street Journal reports that some banks are lowering down payment requirements from the typical 20 percent for borrowers with excellent credit. Those with high incomes, such as doctors, are also being offered favorable terms. Additionally, employers in expensive areas of the country are stepping up their mortgage assistance programs in order to attract high-caliber employees.
As with traditional mortgages, jumbo mortgage rates are low. The latest Bankrate survey of mortgage rates showed that the spread between 30-year fixed-rate jumbo loans and regular loans, or conforming 30-year fixed-rate loans, is less than a half a percent. Jumbo loans rates are less than 4 percent, and part of the reason they're low is because stricter lending guidelines have led to fewer defaults, making them more attractive to investors.
Fannie Mae, Freddie Mac and the Federal Housing Administration financed a record $117.6 million in mortgages exceeding $417,000, according to Inside Mortgage Finance. That's a 38.9 percent increase from 2011. The non-agency jumbo market of $203 billion was a 19.4 percent increase from 2011 to 2012.
Keep up with your wealth and mortgages, and follow me on Twitter @JudyMartel.