Jumbo Loans Stage a Comeback

Some of my lenders who completely gave up on the jumbo market only a few months ago have sent me notices that they’re introducing some new jumbo programs. That’s good for homeowners and it’s good for brokers, it’s good for lenders and investors too because, as I wrote about here, investors really freaked out more than necessary regarding jumbo loans. The fact is, jumbo loans do represent a higher risk, but that doesn’t mean a jumbo loan can’t be underwritten effectively and at a decent interest rate to the borrower.

Investors are coming back, like any big market swing, into some semblance of reality; although jumbos are still priced way too high in relation to conforming loans in my opinion, I don’t think jumbo rates will be dropping significantly for some time, if ever. I guess we should all just be happy that we can get them done, right?

The good news for Joe Homeowner is that he’s beginning to see more options open up with regard to lenders, the bad news is that he’s still going to pay a hefty premium for a jumbo loan. In most cases, it’s going to be in his benefit to split the Jumbo into a conforming first and fixed second or HELOC; blended rate will usually be lower that way, at least it will in this market.

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