Jumbo Mortgage Refinancing

Refinance Rates

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Loan	Rate	APR
30 Year Fixed Rate	3.88%	3.38%
15 Year Fixed Rate	4.06%	3.61%
5/1 Adjustable Rate	2.75%	3.37%
* These rates are averages, and might not apply to you.

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Indeed, before we discuss jumbo mortgage refinancing, it is probably necessary to define or describe the term jumbo mortgage. Most people have never heard of it and basically that is because few people qualify for jumbo mortgages. The perception is jumbo mortgages are for the wealthy, as high deposits are required, and extremely high credit scores are a necessity. Most lenders require a minimum of twenty percent down and this is very basic. Many other lenders require much more. Further, jumbo mortgages are those outside of the limits set at $417,000 in 2010 for a single family dwelling in the continental U.S. In some high cost areas the limit can be as high as $729,750.

Right now, however, interest rates and thus refinance rates for jumbo mortgages are dropping, and because of this it is a good time to consider jumbo mortgage refinancing, especially if you want to move into a more expensive home. The criteria still exist in terms of plenty of equity and excellent credit, but for those wishing to get out of their small home, this may be the time for refinancing. Interest rates are generally higher on non-conforming loans (those that exceed the limits) because of the higher costs to underwrite, and the greater risk to lenders. In fact, present trend seems to be that more of the wealthy are defaulting on mortgages than the rest of the population.

If you do have a jumbo mortgage, there are two benefits right now to considering a mortgage refinance for your jumbo home loan. The first is that maybe your mortgage is well under the conforming limits since you having been making payments, and since the limit has increased since your last refinance. That means you can refinance at a lower rate because the mortgage is no longer a jumbo mortgage, but rather a conforming loan. Second, because jumbo interest rates are falling, you can reduce your interest payments significantly by refinancing. Of course, the costs of refinancing may outweigh the savings in interest, but you should at least compare the calculations to make a decision.

One of the issues with jumbo mortgages and refinancing seems to be that it is not fair across the country. For example in areas like Boston where housing is incredibly expensive, even smaller homes are exceeding the conforming limits. This means that home owners are being punished just for living in a high real estate market. Likewise in San Francisco, three-quarters of a million dollars is not always buying a mansion or what would be considered a luxury home.

Also, what some jumbo loan borrowers are doing to refinance is to take out two separate loans so that they can benefit even further from decreases in interest rates. For them, jumbo mortgage refinancing is trying to find alternatives to the jumbo mortgage.

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