Why a Jumbo Mortgage Refinance Is a Good Idea

Taking on a jumbo mortgage refinance loan is a viable solution for homeowners who are planning to get rid of their existing loans and other mortgages. Before the stimulus package of 2009 was implemented, homeowners were not so keen about refinancing using jumbo mortgages, which are basically loans that exceed a standard sum of $417,000 as set by Freddie Mac and Fannie Mae. The reason for this was the high interest rate that goes with a jumbo mortgage. But with the stimulus package in place, a jumbo loan refinancing is now a good idea. Below are the reasons why.

Lower Interest Rate

Before the stimulus package of 2009 was approved, the interest rate applicable to jumbo mortgage refinance loans was at least half a percentage point higher compared to a conforming loan. In the past, conforming loans did not exceed $417,000. But since the maximum limit for a conforming loan was extended to $615,000, jumbo loans have fallen within the limit of conforming loans and can now be refinanced at a much lower interest rate. In fact, the interest rate for refinancing loans amounting between $417,000 and $650,000 has been reduced to as low as 5.6% from 6.5%.

Easy to Apply For

Refinancing a jumbo mortgage used to be difficult because only a few loan providers are willing to take the risk of offering this type of product. In fact, jumbo mortgage borrowers cannot even get help from Freddie Mac and Fannie Mae because these two government organizations did not refinance jumbo loans. Ever since the limit for conforming loan was adjusted, more financing companies, including the two government mortgage providers, are now willing to accept jumbo mortgage refinance loans.

Less Stringent Terms and Conditions

Before the stimulus package of 2009 was approved, only homeowners who hold at least 20% equity stake in their homes were approved for refinancing. Under the new program, however, this condition no longer applies. Furthermore, even if your home loan exceeds 105% of the present value of your property, you can still apply for mortgage refinancing.

Huge Savings

People who refinance their loans amounting between $417,000 and $650,000 can now enjoy huge savings that they can use to pay credit card debts, augment monthly living allowances, or save for future use. The savings come from the huge reduction of the interest rates applicable to loans that used to be considered as jumbo mortgages but are now classified under conforming loans.

More Options Available

Since there are many companies and financial institutions that are now willing to offer refinancing programs using jumbo mortgage, homeowners now have many options available to them. Now, it is easier to shop for the best refinancing program that will fit your budget and ability to pay.

Attractive Offers

People who are interested in securing jumbo mortgage refinance loans can enjoy more attractive packages. Many banks and financial institutions are giving their clients the special features found only in jumbo mortgage loans which include zero lender fees, private medical insurance, and fast processing, among other things.