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United States : Jumbo Mortgage Rates at Record Lows, Jumbo Market Thawing.

As historically low mortgage interest rates have been recently seen in the low to middle priced housing market, the jumbo mortgage is also making a come back. This is a positive sign for those who are shopping for higher priced homes and those that are in need of refinancing. With jumbo mortgage rates at record lows, the jumbo market is thawing.

Jumbo mortgages are those loans that are too large for government assistance through Fannie Mae, Freddie Mac and the FHA which is available for mortgages that don t exceed $417,000 and $729,750 in more expensive areas of the country. After the financial crisis hit, the jumbo mortgage market basically froze and came to a halt.

With the absence of a secondary market and housing prices continuing to drop, lenders had to keep these existing jumbo mortgages on their balance sheets and became unwilling to add any additional risky, jumbo loans to their portfolio which left high end buyers locked out of the market. It literally crippled the jumbo mortgage market for high end home purchases and refinances.

As banks have begun to recover and have more capital on hand, they are now more willing to return to the jumbo mortgage market, although at a cautious pace since the secondary market has not yet returned. As the jumbo mortgage market tends to be more varied, so do the interest rates and terms vary widely. All of this is great news for upscale home shoppers, those who want to refinance and those who want to upgrade to larger homes.

Although the banks are beginning to lend and jumbo mortgage rates are at record lows, lenders are still being very cautious and using tight standards for qualifying. Those applying will need to fully document income and assets for the past several years.

Although required credit scores will vary, the average score needs to be at least 720. As far as debt ratios are concerned, monthly mortgage payments must require no more than 36% to 38% of pretax income. Debt payments, including auto loans and credit card payments, cannot take up more than 41% of pretax income. For purchases, the down payment depends on the amount of the loan with some as low as 20% and some as high as 40% down payment.

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Date:Jul 28, 2010
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