The world of finance and fluctuating mortgages rates is a confusing world for most potential new home buyers and it can be extremely difficult to navigate without doing some research and understanding exactly what your getting into. The recent home mortgage crisis has affected almost everyone in the Nation and has impacted all forms of mortgages loans. A jumbo loan is a mortgage loan for an amount above the conventional conforming loan. A conventional conforming loan is in the neighborhood of $417,000 or less and is certainly where most Americans are at in purchasing power. A jumbo mortgage loan is for an amount between $417,000 and $729,750. Any amount over that would be considered super jumbo loans.
Besides the obvious difference in loan amount, a ‘jumbo’ loan will carry a higher interest rate than a conforming one. Depending upon the markets and the lender the difference can be about a half percent but have been as high as one and a half percent greater than a conforming loan rate in recent years. This makes the loan simply more expensive. That’s why those who buy a home with a sales price above $417,000 attempt to put down enough money or acquire other funds to get the primary loan amount down to the conforming level.
In summary, the home equity loan market is unlikely to pick up in the near future, for the simple fact that very few have any home equity to borrow against. This does not mean that it is impossible to arrange a home equity loan, but it is important to know the value of the home and actually have some equity. This is another issue currently being faced – with falling sales volumes, it is becoming increasingly difficult to accurately value any real estate, and therefore more difficult to accurately assess the level of equity. One thing is for certain; the banks will err on the side of caution when doing so.