Where Are Those “Jumbo Conforming” Loans with Lower Interest Rates?

Here is a quick fact in the life within the lending business that no one can refute...

The larger the mortgage, the riskier the loan and therefore the tougher it is for a home-buyer to get a mortgage approved.

Now weeks after the Economic Stimulus Act of 2008 changed the maximum amount on a conventional conforming loan from $417,000 to about $729,500 in high valued areas such as Santa Barbara CA, substantially lower interest rates on these larger loans are not being doled out to consumers as many thought they would be.

This new adjustment and the conforming loan was in theory supposed to reduce the interest rates on the larger, so-called "jumbo conforming" loans.  With these newly available larger loans at rates comparable to the older conforming loans, consumers would now be able to re-fi and/or purchase newer homes in high cost areas such as we have here in Santa Barbara and Montecito.  This has not happened quite as we expected...but might still happen here in the coming future from what I am hearing via some lenders.

...Time will tell

So far with the state of the economy and the liquidity crunch, larger loans with lower interest rates are not being bought up by the secondary markets that purchases the loans from the lenders...therefore the lenders have yet to offer these much anticipated larger loans at lower interest rates.

Additionally, these newer conforming loans are only being offered to borrowers with higher credit scores and are demanding stiffer qualifications than conventional conforming loans.

So where does this lead us...From what I am hearing, jumbo conventional loans with lower rates are probably in our future in the coming year, just not as soon as we expected.

For information on Real Estate here in Santa Barbara, Montecito and/or our surrounding areas, as well as any other aspects of life in our area, please don’t hesitate to contact Kevin Schmidtchen at Sotheby’s Int’l Realty. Thank you for reading.  I hope you find Santa Barbara Real Estate Voice informative. Please feel free to contact me or comment below with any thoughts. Subscribe to Receive Personal Listings of Santa Barbara Area Properties Search the Santa Barbara Area MLS

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