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Lower Mortgage Rates on your Jumbo Loan

Over the past few years the interest rates on almost all mortgage loan products have declined to a very low level. While interest rates on pretty much all mortgage loans has declined considerably, those looking to take out very large loans may still have to pay a higher interest rate. Jumbo loan rates, which are required for loans which have a balance over $730,000, are often as much as 1% higher than those that are considered more conventional mortgage loans. While they are often higher, there are still ways that you can obtain lower mortgage rates on jumbo loans.

One of the best ways to get lower mortgage rates on your jumbo loan is to put forth more equity. One of the biggest reasons why lenders offer higher rates on jumbo loans is because if the home declines in value, the lenders will have to take a much larger loss than they would with a lower loan amount. Lenders then try and offset this risk by receiving higher rates on their loan. To receive a lower interest jumbo loan rates you could try to put forth a larger down payment. By putting forth at least a 25% down payment, you will help a bank become more comfortable that they will not have to absorb a loss in the even that you default on your loan payment.

You could also receive a lower interest rate on your jumbo loan if you have a good credit score. Mortgage lenders have placed a much higher reliance on credit scores over the past few years than they did during the sub-prime lending era. This is because banks have realized how high of a rate of default people with poor credit scores have compared to those with good scores. To offset the risk that they are taking on by lending to a person with poor credit, banks will charge higher rates. To ensure that you get the best rate possible, be sure to have an excellent credit score prior to applying.

While putting for a larger down payment and having good credit is important, many borrowers are able to get better rates simply by shopping around when they look for loans. All of the mortgage lenders tend to view jumbo loans differently which means that one may consider your loan a good investment, and offer you a good rate, while another may consider a bad investment. Working with multiple lenders will ensure you get the best rate offer possible.