Jumbo mortgages

Jumbo mortgages remain expensive and hard to get. So is there any advice for a homebuyer who is looking to move up into a larger home?

REALTOR magazine detailed the situation. The problem is that the jumbo loans are too big for secondary mortgage market companies Fannie Mae and Freddie Mac to buy for packaging into securities and outside the limit of FHA.

Banks are requiring more and charging more for jumbo loans. For example, to get Bank of America financing, borrowers must come with 20 percent down and have a good credit score. They’re restricted in the amount of home they can buy: no more than $1.5 million, though that limit will rise later this year to $2 million.

Here is one solution offered by REALTOR:

Adamo says the federal government can help simply by tweaking the so-called
conforming-jumbo market composed of homes above the traditional conforming-loan limit of $417,000 and below the new conforming-loan limit of $729,750. Loan
limits are set by county, and only about 75 counties in the United States are
eligible for loans up to the $729,750 limit. All the other high-cost areas fall
somewhere between $417,000 and that limit. Thus, high-cost homes in a county
with a lower median home price can’t qualify for the higher conforming
loans.

A simple regulatory fix that would eliminate the county-by-county
restrictions would go a long way to clearing up the problem, Adamo says. Lenders
should be allowed to decide which borrowers, based on their creditworthiness,
can apply for jumbo conforming loans, letting their underwriting

considerations determine loan decisions.

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