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Increase the jumbo mortgage limit to over $700,000

Both Freddie and Fannie Mac purchase most of the mortgages in the United States from the original banks and lenders. They have a specific monetary limit on the amount of a mortgage that they will purchase. Any mortgage that exceeds this limit is called a jumbo mortgage.

Loans that Freddie and Fannie Mac will purchase, which are those under a number establish by the government, are known as conforming loans. A loan which is above this number is known as a non-conforming loan. Fannie and Freddie Mac only purchase conforming loans.

Jumbo mortgages are often for large luxury homes. There are many problems assessing luxury homes in this range and usually more than one appraiser must be contacted in order to find a fair value since it can be so subjective. Currently the jumbo mortgage limit is just over $400,000. Although the US government attempted to increase the jumbo mortgage limit to over $700,000, it has had little effect and the industry continued honor only the old limits for conforming loans.

Because of the size of the mortgages, there is an excessive amount of risk involved in a jumbo loan. For this reason even the best jumbo mortgage rates are at least one quarter of a percent above a normal mortgage. In fact, depending on the situation, some jumbo mortgage rates have risen to as much as 1.5% above the rate for a conforming mortgage.

There is additional risk involved with jumbo mortgages as well. The homes are large and expensive. Should the mortgage holder default, the home will most likely not be sold again quickly. This means that a large estate will begin to diminish. The cost of upkeep for a large estate like this would be significant.

However, because of the slow strengthening of the housing market, lenders are beginning to see the interest rates on non-conforming mortgages are coming down. This may make them more eager to lend, and may fuel the best jumbo mortgage rates seen in many years.

There are nearly 100 lenders in the United States who are willing to buy loans using the government guideline of $700,000 in their markets. The availability of the homes is high and the prices are actually lower than they have been, relative to their original prices. For those who are searching for a jumbo mortgage, now may be