Are Jumbo Loan Rates Scaring You? From Buying A Resort Property?

June 20th, 2008 categories: Real Estate News

So you spent a week at your favorite lake, be it Canandaigua, Keuka, or Seneca, had a great time and thought how perfect it would be to own a home like this, to have for the family enjoyment as a vacation home and possibly an investment. Then you talked to your mortgage,lender . The story now takes a twist…the property your are interested in puts you into the Jumbo Loan category

Jumbo Loan

	A mortgage with a loanamount exceeding the conforming loan limits set by the Office of Federal Housing Enterprise Oversight (OFHEO), and therefore, not eligible to be purchased, guaranteed or securitized by Fannie Mae or Freddie Mac. OFHEO sets the conforming loan limit size on an annual basis.Also referred to as “Jumbo Mortgage“.

	Jumbo loansare often securitized by institutions other than Fannie Mae or Freddie Mac. These securities carry more credit risk than those issued by Fannie Mae or Freddie Mac, and therefore, trade at a yield premium which translates into slightly higher interest rates. However, in recent years the spread in interest rates between jumbo and conventional mortgages has been reduced.

There are ways around setting the entire loan up under the Jumbo category. First, if you have another investment property, you can sell it and transfer the capital gains into the new property utilizing the 1031 tax exchange. This will minimize the amount of monies being borrowed against the property. Second, you can procure a loan up to the jumbo loan limit and then secure an additional loan for the difference. These are options that can be better explained by your loan officer.

Currently lake front properties are still appreciating and with loan rates being as low as they are, it is the perfect time to purchase your favorite spot in the Finger Lakes.

Are Jumbo Loan Rates Scaring You? From Buying A Resort Property?

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