The first day of spring offers new opportunities for well qualified, upper bracket buyers:
Bank of America has announced that it is re-entering the Jumbo Loan markets. As reported in the Daily Herald, they will be offering loans of $730,000 to $1,500,000 on 30 year amortizations and interest rates below 6.00%. Borrowers will have to make 20% down payments, have proofs of income, hold cash reserves of six months of monthly payments (principal, interest, taxes and insurance) and have golden credit ratings.
Jumbo loans are too big to be insured by Fannie Mae or Freddie Mac. They are typically only funded if private mortgage insurance is available. Those PMI companies took a pounding when loan default rates exploded. Consequently, they started charging prohibitive premiums to meet the increasing risks associated with such large loans. For a while there it was nearly impossible to fund Jumbos for a while.
But it stands to reason that there are great rewards out there for lenders who will make these loans, and there has been a steadily growing demand for funding, particularly in affluent suburban areas and some of the elite City neighborhoods (to say nothing of other high price markets like in California and New York City).
To my knowledge ING and Astoria are also making Jumbo loans right now.
The more competition, the better.