December 4, 2019
When you are searching for a home that costs more than what you can get through a conventional loan, you must apply for what is called a jumbo loan. Most of the time, jumbo loans are used for homes that cost more than $510,400, but in some places of the country, that number rises to $765,600.
Interest Rates of Jumbo Loans
How Jumbo Loan Rates are Set by Lenders
Lenders use the same methods to choose their jumbo loan rates as they do their conventional loan rates. This includes looking at the ten-year Treasury rate and considering what the current conventional loan rate is.
Lenders are always looking to increase their profits and one way they do that is to add an additional 1.5% to 2% to the rates. That extra percentage can be increased even more if the lender believes that an applicant for a jumbo loan is riskier than others they have approved in the past.
The rates for a jumbo loan will depend on the terms of the loan. A fixed rate mortgage will have a higher rate in the beginning than an adjustable rate and some borrowers may even offer interest only jumbo loans, but those always have a higher rate.
Where Jumbo Loan Rates are Going in the Future
No one really knows how low or high jumbo loan rates will be in the future, but now is definitely the time to take advantage of the lower rates if you want a higher priced home and have the credit score and money to be approved.