Jumbo Mortgages Are More Affordable
Wealthy home buyers are paying lower average rates on jumbo mortgages and sometimes, they don’t even have to come up with a large down payment or mortgage insurance.
In the last several months interest rates on jumbo loans (mortgages that are $417,000 or more or $625,000 or more in high-priced markets) have been lower than what average borrowers pay. The average rate on jumbo loans, for example, was 4.24 percent the last week, compared to 4.36 percent for a 30-year, fixed-rate conventional mortgage.
lenders also have reduced their down payment requirements, requiring as little as 10 percent down, which is about half the normal rate. Some lenders are even waiving the private mortgage insurance requirement.
Several banks have lowered their credit score standards for jumbo loans. In the past, most jumbo loan borrowers were required to have at least a 700 credit score to qualify, but now lenders are approving some applicants with credit scores as low as 650.
Banks are seeking out jumbo loan customers in order to gain them as clients for other banking services too, such as retirement planning, says Malcolm Hollensteiner, who is the head of retail lending for TD Bank. Jumbo borrowers tend to have better track records in repaying their loans and have fewer mortgage defaults, so more banks are willing to take a chance on them.