Expensive homes come with expensive mortgages. Lenders have developed large specialized loans known as "jumbo loans" that allow borrowers to borrow more. The luxury home market is continuing to rise, so naturally, the jumbo loan market is following. According to the National Association of Realtors, sales of homes worth between $750,000 and $1 million are up 38.7% since last year. Homes selling for over $1 million has gone up 25.7%
Interest rates of these jumbo loans have been creeping closer and closer to the rates of ordinary loans, some jumbo's interest rates have been just as good as the average priced loans. This is one of the main reasons we are seeing a boom in jumbo's. The rates have been able to decrease because only the most qualified buyers are being approved for such a large amount of borrowed money.
Written by: Brad Novy