A jumbo mortgage loanis one where the amount borrowed is above conventional conforming loan limits. This standard is set by the two government-sponsored enterprises Fannie Mae and Freddie Mac, and sets the limit on the maximum value of any individual mortgage they will purchase from a lender. Fannie Mae (FNMA) and Freddie Mac (FHLMC) are GSEs (government sponsored entities) that purchase the bulk of U.S. residential mortgages from banks and other lenders along with the FHA, allowing them to free up liquidity to lend more mortgages. When FNMA and FHLMC limits don’t cover the full loan amount, the loan is referred to as a “jumbo mortgage” in which private investors are in the marketplace to provide these necessary funds. The average interest rates on jumbo mortgages are typically higher than for conforming mortgages due to the inherent risk the investors are taking on riskier backed assets. On October 1, 2011 the jumbo conforming limit of $729,750 in “high cost” areas was reduced to $625,500.As of 2010, the limit on a conforming loan in “general” areas was $417,000 for most of the US, apart from Alaska, Hawaii, Guam, and the U.S. Virgin Islands, where the limit was $625,500. The limit in “high cost” areas was $729,750 and $938,250, respectively.
Jumbo mortgage loans are a higher risk for lenders. This is because if a jumbo mortgage loan defaults, it may be harder to sell a luxury residence quickly for full price because less of the population can afford pricier homes. Luxury prices are more vulnerable to market highs and lows in some cases. That is one reason lenders prefer to have a higher down payment from jumbo loan seekers. Jumbo home prices can be more subjective and not as easily sold to a mainstream borrower, therefore many lenders may require two appraisals on a jumbo mortgage loan. The interest rate charged on jumbo mortgage loans is generally higher than a loan that is conforming, due to the higher risk to the lender. It can be more expensive to refinance a jumbo loan due to the closing costs, because taxes, insurance and other related costs are so much greater. Some lenders will offer the service of an extension and consolidation agreement, so that a jumbo refinancer will not have to pay for mortgage tax again on the same principal balance. In other cases, title insurance companies will offer up to a 50% discount, often required by law for those refinancing within 1 year to 10 years. The largest discount is for refinancing within one year. Some consumers seeking a jumbo mortgage choose to seek advice from a competent professional familiar with jumbo mortgage loans.
OPTION 2 – Some investment brokers and/or large investment firms will lend money to their clients for jumbo luxury loans but secure it against liquid assets they manage for them. Often times these loan are lower in cost since their is collateral backing the loan to the borrower.
The average U.S. rate on a 30-year fixed mortgage has fallen to near its record low set earlier this month bringing down the rates for those of us here in Charleston, SC as well.The rate on the most popular mortgage dipped to 3.37% from 3.39% last week, mortgage buyer Freddie Mac said Thursday. Two weeks ago, the rate reached 3.36%, its lowest level on records dating to 1971.The average rate on the 15-year fixed mortgage, often used for refinancing, set a record low of 2.66%, down from last week’s 2.7%.Cheaper mortgages are helping fuel a modest but steady housing recovery, coupled with falling inventory the Charleston SC housing market has seen a dramatic uptick in recent months.The average rate on the 30-year loan has remained below 4% all year. And rates have fallen even further since the Federal Reserve started buying mortgage bonds in September to try to encourage more borrowing and spending.The Fed said it would continue buying bonds until the job market shows substantial improvement. When home prices rise, people tend to feel wealthier and spend more freely. And consumer spending drives nearly 70% of economic activity. Charleston, SC real estate agent and ex-mortgage professional states: ” be prepared for mortgage rates to eventually increase as soon as the fed realizes they can’t afford to continue to purchase bonds in order to fund the housing market recovery. A natural housing recovery not based on artificial measures is what will achieve a proper recovery; buying bonds is simply a band-aid”.Home sales have risen from last year, and prices are rising more consistently in most areas. Charleston SC home builders as well as those around the U.S. are more confident and starting more homes. Lower rates have also persuaded more people to refinance. That typically leads to lower monthly mortgage payments and more spending.Not only builders in Mt. Pleasant SC, but also throughout the nation last month started construction on single-family houses and apartments at the fastest rate in more than four years, the Commerce Department said Wednesday. And they laid plans to build homes at an even fast pace in coming months — a signal of their confidence that the housing rebound will last.Other recent reports have shown marked improvement in the housing market five years after the bubble burst.Still, the housing market has a long way to a full recovery. And many people are unable to take advantage of the low rates, either because they can’t qualify for stricter lending rules or they lack the money to meet larger down payment requirements.To calculate average mortgage rates, Freddie Mac surveys lenders across the country on Monday through Wednesday of each week.
The average doesn’t include extra fees, known as points, which most borrowers must pay to get the lowest rates. One point equals 1% of the loan amount.The average fee for 30-year loans was 0.7 point, unchanged from last week. The fee for 15-year loans also held steady at 0.6 point.The average rate on a one-year adjustable-rate mortgage edged up to 2.60% from 2.59%. The fee for one-year adjustable rate loans was stable at 0.4 point.The average rate on a five-year adjustable-rate mortgage rose to 2.75% from 2.73%. The fee was unchanged at 0.6 point.
CHARLESTON, SOUTH CAROLINA – Average mortgage rates on fixed mortgages fell this week and are just slightly above record lows reached earlier this year. The low rates have contributed to a modest housing recovery.
GSE Freddie Mac said Thursday that the rate on the 30-year loan declined to 3.59%, down from 3.66% last week. Five weeks ago, the rate fell to 3.49%, the lowest since long-term mortgages began in the 1950s.
The average on the 15-year fixed mortgage, a popular refinancing option, slipped to 2.86%. That’s down from 2.89% last week and from the record low of 2.8% five weeks ago.Cheap mortgages are a key reason the housing market is finally started to rebound five years after the bubble burst. However, another large factor is banks are not releasing the foreclosed homes they have on their books, and are sitting on them thus reducing the inventory and increasing demand. Sales of newly built and previously occupied homes are well above last year’s levels. Prices have increased consistently, largely because the supply of homes has shrunk while sales have risen. And Charleston SC builder confidence is at its highest level in five years, mean while home builders in areas like Mount Pleasant, SC are seeing very good signs of growth. Scott’s Creek in Mount Pleasant, SC neighborhood has 18 homes under construction currently and more under contract.Still, the Charleston SC housing market has a long way back to full health. Some national economists forecast that sales of previously occupied homes will rise 8% this year to about 4.6 million. That’s well below the 5.5 million annual sales considered healthy. Many people are still having difficulty qualifying for home loans or can’t afford larger down payments required by banks. If you need help with home financing in Charleston South Carolina and need advice contact me at.
Mortgage rates in Charleston SC are low because they tend to track the yield on the 10-year Treasury note. A weaker U.S. economy and uncertainty about how Europe will resolve its debt crisis have led investors to buy more Treasury securities, which are considered safe investments. As demand for Treasurys increase, the yield falls.To calculate average rates, Freddie Mac surveys lenders across the country on Monday through Wednesday of each week.The average does not include extra fees, known as points, which most borrowers must pay to get the lowest rates. One point equals 1% of the loan amount.The average fee for 30-year loans was 0.6 point, down from 0.7 point last week. The fee for 15-year loans also slipped to 0.6 point from 0.7.The average rate on one-year adjustable rate mortgages fell to 2.63% from 2.66% last week. The fee for one-year adjustable rate loans was unchanged at 0.4 point.The average rate on five-year adjustable rate mortgages declined to 2.78% from 2.80%. The fee held steady at 0.6 point.
Existing-home sales kept up their recovery in July, rising 2.3% as prices jumped 9.4% from a year ago, according to the Charleston TridentAssociation of Realtors, but the market’s progress disappointed analysts who expected more.Smaller inventories of homes for sale let sellers push prices higher, the association said. The average price of a new home rose 9.4% to $187,300, aided by a shift in the mix of homes sold, with fewer low-end units included. “I am seeing multiple offers within in first week a nice home comes on market,” Isle of Palms Realtor, James Schiller.Nationally, the number of homes sold rose to a seasonally adjusted annual rate of 4.47 million. The numbers missed economists’ expectations of about 4.52 million home sales, according to Drew Matus, an economist at investment bank UBS.“Mortgage interest rates have been at record lows this year while rents have been rising at faster rates,” NAR Chief Economist Lawrence Yun said in a statement. “Combined, these factors are helping to unleash a pent-up demand. However, the market is constrained by unnecessarily tight lending standards and shrinking inventory supplies, so housing could easily be much stronger without these abnormal frictions.”Independent economists are looking for the housing market to begin slowly reversing its more than 30% slide in prices, though most do not expect substantive price gains until at least 2013 or 2014.“It was a little below expectations but still good,” said Mike Zoller, an economist at Moody’s Analytics. He said the sharp gains in prices reflect the smaller percentage of foreclosure-related distress sales included in the numbers, as well as the shift to more higher-end home sales.
Tight credit or worries about jobs may be prompting buyers to stay on the sidelines, said Patrick Newport, an economist at IHS Global Insight. The gain in home sales was the second-smallest reported this year, he added. As long as the buyer has good credit, money to put down, and good job security getting a loan is still easy by most standards.
“These are not great numbers,” Newport said. “We have record-low mortgage rates. Something is going on.”The economists also disputed the Realtor association’s argument that sales might be stronger if more homes were available.Nationally, inventories of available homes work out to about six months’ worth of expected sales, Zoller said, a level he called “reasonable.” The proportion of homes that are vacant is still above 2%, Newport said, citing Census data. That’s higher than a historical norm of about 1.7%, he said.The bright side is that the overhang of foreclosures are finally seeing a decline, relieving an overflow that pushed prices lower, Barclays economist Michael Gapen wrote in a note to clients. About 24% of sales were foreclosure-related, down from 29% last July, he said.
A jumbo mortgage loan is one where the amount borrowed is above conventional conforming loan limits. This standard is set by the two government-sponsored enterprises Fannie Mae and Freddie Mac, and sets the limit on the maximum value of any individual mortgage they will purchase from a lender. Fannie Mae (FNMA) and Freddie Mac (FHLMC) are GSEs (government sponsored entities) that purchase the bulk of U.S. residential mortgages from banks and other lenders along with the FHA, allowing them to free up liquidity to lend more mortgages. When FNMA and FHLMC limits don’t cover the full loan amount, the loan is referred to as a “jumbo mortgage” in which private investors are in the marketplace to provide these necessary funds. The average interest rates on jumbo mortgages are typically higher than for conforming mortgages due to the inherent risk the investors are taking on riskier backed assets. On October 1, 2011 the jumbo conforming limit of $729,750 in “high cost” areas was reduced to $625,500.As of 2010, the limit on a conforming loan in “general” areas was $417,000 for most of the US, apart from Alaska, Hawaii, Guam, and the U.S. Virgin Islands, where the limit was $625,500. The limit in “high cost” areas was $729,750 and $938,250, respectively.
Nationally, the number of homes sold rose to a seasonally adjusted annual rate of 4.47 million. The numbers missed economists’ expectations of about 4.52 million home sales, according to Drew Matus, an economist at investment bank UBS.“Mortgage interest rates have been at record lows this year while rents have been rising at faster rates,” NAR Chief Economist Lawrence Yun said in a statement. “Combined, these factors are helping to unleash a pent-up demand. However, the market is constrained by unnecessarily tight lending standards and shrinking inventory supplies, so housing could easily be much stronger without these abnormal frictions.”Independent economists are looking for the housing market to begin slowly reversing its more than 30% slide in prices, though most do not expect substantive price gains until at least 2013 or 2014.“It was a little below expectations but still good,” said Mike Zoller, an economist at Moody’s Analytics. He said the sharp gains in prices reflect the smaller percentage of foreclosure-related distress sales included in the numbers, as well as the shift to more higher-end home sales.
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