You need a mortgage of more than $207,150. You know you can qualify for the
loan, and you've got a sizable down payment. Are you still going to pay a huge premium for
your "jumbo" loan?
What You Want: In the past, lenders didn't like jumbos because if one went bad, the
effect was like losing five smaller mortgages. That's why rates were typically one half to a
full percentage point higher. But now, because of rising home prices and fairly stable
rates, the race to write jumbo loans has become the most competitive part of the market --
and lenders no longer get away with charging so much for larger loans.
The product menu for jumbos has also expanded dramatically -- largely in adjustables.
Indeed, nearly 75% of jumbo buyers choose adjustable-rate loans versus 31% of buyers in the
overall market. Why? Because with loans of this size, it's even more important to get the
lowest monthly payment. Lenders are also getting more flexible. Just a few years ago, you
could only dream of getting 90% financing on a jumbo -- 75% was tops. But today you can get
90% or 95%.
Where to Shop: Large banks have traditionally been the leaders in jumbo loans,
largely because they have much bigger loan portfolios. They are still good bets. Brokerage
firms, eager to please their more moneyed clients, are a good bet, too. But the fact is,
just about any lender wants to sell jumbos, whether it's adjustable, delayed adjustable or
fixed. "It's a very price-sensitive customer segment and also a very service-sensitive
customer," says Sylvia Reynolds, senior vice president at Bank of America. "You have to
deliver a competitive rate and excellent service to get the business."