We noticed that more and more lenders start to loosen up restrictions on jumbo loan and provide better rate for jumbo loans.
Jumbo loans are loans over 729,500 in Santa Clara county and they are not backed by Fannie or Freddie Mac. Since the sub-prime loan issue followed by economy downturn, very few private investors are willing to get into the jumbo loan market. As a result, the rate for jumbo loan became very high. On top of that, the tightening of lending rules hit jubmo loan even harder. Over the past year, it almost became a dead market.
Now it starts to come back to life gradually. Here are a few important improvements on lending for jumbo loans:
- Loan amount allowed increased to up to 2 million.
- Loan to value ratio allowed increased to 80%
- Lock rate procedures are more flexbile. No need to wait until approval to lock rate.
- Shorter rate lock period is allowed. Borrower can lock for 30 days rather than previously required 60 days.
- Rates improved significantly. 5/1 ARM can go as low as 3.375% while 30 years at about 5%.
