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  • Government Help refinancing jumbo Mortgages

    Is there any government help available for refinancing a Jumbo Mortgage?

    What is a Jumbo Mortgage?
    freddie_mac_and_fannie_mae_logo A Jumbo Mortgage, previously, was a mortgage that was more than $417,000. A loan of less than that could previously be refinanced through Fannie Mae and Freddie Mac. A loan of more than that could not.
    Under President Obama’s 2009 Stimulus Package, however, the limit has been extended to $650,000. Thus, a loan between $417,000 and $650,000 would previously have been considered a Jumbo Loan, and no government help would have been available for refinancing. Now, such a loan would not be considered a Jumbo Loan, and it can be refinanced through Fannie Mae and Freddie Mac.

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    Before this action by President Obama, refinancing a loan of between $417,000 and $650,000 was difficult because of the credit crunch. It is now easier. You can now save one percent per year by refinancing your loan of that amount.
    There are a variety of banks and finance companies that will refinance a jumbo loan. Some programs offer no requirement of private mortgage insurance, no lenders’ fees, no points, and interest only new home loans.
    Under President Obama’s Stimulus Package, it is no longer necessary to hold a 20% equity share of a home before refinancing a Jumbo Mortgage. Even if a mortgage exceeds 105% of the current value of the home, you are eligible to apply to refinance your Jumbo Mortgage, or the loan that previously would have been considered a Jumbo Mortgage. The interest rate on refinancing such a loan has been reduced from 6.5% to 5.16%.
    Banks that will refinance under the government program can be found at any number of popular lending sites, and the official sites of many banks have information.Traditionally, many who did refinance Jumbo Loans obtained interest rates of 7%, which was high enough that many abandoned their plans of refinancing. On the other hand, those with traditional mortgages often paid rates of 5% or below. Traditionally, those who obtained Jumbo Loan refinances have had to accept variable interest rates, rather than fixed.
    Fannie Mae and Freddie Mac have traditionally not purchased Jumbo Loans, so it is significant if you want to refinance that the government has changed the definition of what a Jumbo Loan is. You now can get government help for refinancing a loan that would have been considered a Jumbo Loan before, because it is not considered such a loan now. That is true, even if you cannot get help on what the government now considers a Jumbo Loan.

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