Jumbo Loans - Changes Coming

Jumbo Loans – Changes Coming

As I write this, we are deep in the throes of a real, upper-Midwestern July.
Weather forecasters are using this season’s scary phrase Heat Index with
alarming regularity (although this may seem great to you if the phrase Wind
Chill Index
terrifies you…and if you’re in San Diego, just feel free to
keep laughing at me). This week, we will see daily temperatures over 95 degrees
and a heat index north of 100. This hardly seems the time to be taking pictures,
but it’s often fascinating to watch how weather extremes alter the world around
us. The effects of heat can be just as powerful a memory as the beauty of snow
or sparkling ice crystals.

Jumbo Mortgage Update

Currently, a jumbo loan is one that is greater than $417,000. These loans are not typically
purchased by Fannie Mae or Freddie Mac, and carry higher rates than their
conforming brethren. At the lows of the post-2008 mortgage market conflagration
(I’m tired of calling it a “meltdown”), the difference between jumbo loans and
conforming loans was greater than 1%…if jumbo financing was even available.
Today, the spread has narrowed and jumbo ARM rates are downright
cheap.

The jumbo market will soon expand. (WSJ article) Beginning in October, the
federal government will start lowering the jumbo loan size it will buy (this is
currently $729,750 in so-called “high cost” areas). Although this won’t affect
the Illinois jumbo limit immediately, it is widely believed that the $417,000
conforming limit will be lowered by some amount in late October or early
November. If you have a conforming loan greater than $350,000 and you are
considering refinance, act now, as you may find yourself with a jumbo loan by
Thanksgiving.

If you need help with a jumbo mortgage, please give me a call — 847-920-8030

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