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Analyzing the market for Jumbo Loans


The secondary market has not been favorable for jumbo loans, what will it take to get this fixed?

The historic drop in mortgage rates has been welcome news for millions of homeowners. There are still many home owners who have jumbo loans that would like to refinance into a fixed mortgage, but this market has not seen the dramatic drop in rates that the conventional marketplace has experienced. There are a number of reasons for this and a some proposed solutions to help fix this market. The main reason why rates have not dropped similar to conventional mortgages, is that jumbo loans are not eligible to have their mortgage securities insured by government agencies such as Fannie Mae or Freddie Mac as they carry loan balances over $417,000. When the credit market crashed in August of 2007, the secondary market for non (GSE) loans has been very limited. Governor Arnold Schwarzeneger is leading a political campaign to attempt to have the loan limits increased above the present threshold. It is estimated that almost half of California home owners are in eligible to refinance into the traditional agency loans due to the present loan balances that they are carrying. The recent reduction of the Fed cutting the prime rate down to 6.5% should help to bring some more liquidity to the credit market. If a homeowner is looking for a jumbo loan, finding a lender that does not try to sell the mortgage in the open marketplace will be their best avenue to secure the most favorable loan terms.

1-24-2008 ? LoanNetwork.com





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