Can I Refinance A Jumbo Loan In This Market?

By Bob Redtree

Tips to help you decide whether it makes sense for you to refinance a jumbo loan in this market.

Mortgage rates have fallen drastically over the last few years, and many borrowers have been looking to refinance. Borrowers who have taken out jumbo loans may not benefit as much from the current mortgage lending markets as those who took out loans below conforming limits. Mortgage loans are considered to be jumbo if they are over the limit set by Fannie Mae and Freddie Mac. These companies are overseen by the federal government and must follow the limits set forth for responsible lending.

Higher Rates

Jumbo loans have a higher rate than conforming loans do and have not been affected as much by the drop in mortgage rates. Current conforming loans have seen significant drops of around one to two percentage rates. This drop makes it very lucrative for a person to refinance their mortgage. Unfortunately, refinancing a jumbo loan in this market is not as effective and therefore many people are not doing it. The average rate for refinancing Jumbo loans is around 7%.

Is It Worth The Extra Cost

If you financed a jumbo loan before 2006, you may be able to refinance it now as being under the conforming limits. In 2006 the limit for conforming loans was increased by 16% meaning many jumbo loans would now fit the criteria for lower rates. If your house still does not qualify under conforming limits for refinancing you should examine the difference in interest rates you would now receive for refinancing a jumbo loan. If there is less than a quarter of one percentage point difference in your new rate, the amount you spend refinancing might eat up any real savings you would get.

There are costs associated with refinancing your mortgage, but if you can refinance a jumbo loan in this market to a conforming loan the savings may be substantial.

Can I Refinance A Jumbo Loan In This Market?

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