Jumbo Mortgages Coming Back Around

There are further signs that the housing market is improving all around us, including a continued growth in new construction as well as the return of jumbo mortgages, which are too large to qualify for government backing.Lenders have brought back these super sized loans, and for buyers who have their eye on luxury home market, now is the time to test the water to see if you qualify for these hefty loan amounts. With the slow return of jumbo mortgages, the accompanying interest rates have dropped even lower than in the past, making it easier than ever to buy more home for your money.

Mortgage Approval

In his January 2013 report on the national mortgage approval rate, Dan Green asserted that it has risen by 11 percent. Lenders are loosening their guidelines for approval as the national economy improves, making a more flexible market for buyers. This has raised the purchase approval rate by about 6 percent from November of 2011 to November of 2012. Of the approximately 2 million applicants last year, just over 60 percent were granted loans. This means that you, as a potential buyer, are more likely to get approval with your bank for a home purchase now and in the coming years.

Jumbo mortgages usually comprise about 25% of all new mortgages, but fell to 4.3% after the housing crisis hit. For 2012, they ascended up to 11.3%. Jumbo loans are any that rise above the conventional loan amount, which in most markets is typically about $417,000. Jumbo mortgages are a more common occurrence in markets such as New York, Chicago and Los Angeles. In Los Angeles, for example, a loan ceases to be conventional once it peaks around $729,750, and in Seattle it's $567,500.

The Market

Luxury properties set in picture perfect backdrops, whether it's nestled high in the foothills, along a river, near a lake, or placed upon the beach


The biggest change in jumbo lending is the down payment. Buyers would have a difficult time trying to find a bank who'd approve a jumbo loan with anything less than 20% down. You can also expect a strict verification of income. The Consumer Financial Protection Bureau just announced tightened lending standards in the private-mortgage market. One change will ban lenders from issuing loans if they don't verify a borrower's income or assets. For qualified buyers, the lender may throw up a hundred different roadblocks, but with today's attractive rates, it can pay to go through the hassle.

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