Considering the recent news that the rich are defaulting on their mortgages faster than the rest of the population, perhaps falling jumbo mortgage rates will help revitalize the market.
A year ago, the average rate on a 30-year fixed jumbo mortgage (those loans of more than $729,750) was 6.86 percent, according to the Bankrate.com weekly survey. This week it came in at 5.48 percent, the lowest it's been since 2003.
The lower rates mean that homeowners with good credit and equity in their homes can refinance, and those looking to trade up to a better home can afford the larger mortgage, with one big caveat, according to Greg McBride, senior financial analyst at Barnktate.com. "Move-up buyers continue to be hamstrung by difficulty selling their existing homes," he says.
To qualify for a jumbo mortgage, your credit score has to be pretty high and you have to cough up a meaningful down payment. "In the jumbo market, lenders require at least 20 percent equity or down payment on a principal residence, with many lenders requiring 30 percent or more. For vacation homes and investment properties, the requirement is often 40 percent," says McBride.
Still, the lower mortgage rates combined with lower home prices is good news for the real estate market in general. As McBride notes: "Lower jumbo mortgage rates don't just benefit the wealthy, but have a much broader impact in high-cost housing markets. A $750,000 home in San Francisco is no mansion."
Will the lower jumbo mortgage rates spur you to refinance or trade up to a more expensive home?
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