Resolve Debt

It’s no secret that the housing bubble that has been driving up housing prices much faster than average income was increasing was going to burst someday. There is actually a story of the Danish daffodil market and how out of control it became. Basically the price of the daffodil got so high because people thought there would always be a buyer that would pay just a little bit more. One day everyone realized how insane it was to pay thousands of dollars for a flower and the whole market fell apart. This is exactly what happened with the real estate market.

When the prices of homes gets too high it becomes very hard to finance a home that you want to purchase. Many homeowners have had to find a jumbo loan instead of a conventional loan. These jumbo loans, also known as a non-conforming loan, allow the consumer to get a larger chunk of money to pay for their home. A jumbo loan is so large that it actually exceed the guidelines that Freddie Mac or Fannie Mae require for loans that they are willing to buy.

Every January the new conforming loan limits are set. The jumbo mortgage loan amounts are based on these limits. The jumbo loan limit is set in place in order to keep the loans from getting out of control. The current jumbo loan rates are as follows: $417,000 for a single family, $533,000 for a two-unit property, $645,000 for a 3-unit property, and $801,000 for a 4-unit property. As you can see, as the number of units in a property increase, the amount that is allowed for the jumbo mortgage loans also increases.

Now just in case you didn’t think a jumbo loan was big enough, have no fear because there is such a thing as a super jumbo loan as well. A super jumbo loan is classified as being over $650,000 for a single unit property. A super jumbo does carry a higher interest rate because of the fact that there is more risk involved, but this is to be expected.

Jumbo loans are a vital part of the American economy. Not everyone wants to get into a home that falls in the range of a standard loan. As free Americans, it is important that we have choices in everything, even our loans. Despite the current instability of the economy, one thing remains clear, jumbo loans will be around for a long time yet.