The Market for Jumbo Mortgages Is Changing
It sounds like another round of bad news for the mortgage industry. The government has made it clear that no one is constitutionally entitled to a government-backed mortgage of up to
The recession has been tough on the jumbo mortgage loan market, loans for homes that are over
Homeowners who wanted to refinance to take advantage of historic low interest rates found they simply couldn't get anyone to give them a loan, particularly since home values were falling. Buyers purchasing high-cost homes found they had to put down as much as 30 or 40 percent in order to land financing.
In a dozen high-cost areas such as
Now, the message is clear: If you want a jumbo loan, you'll have to get one from the private mortgage market. While the government will still back mortgages in high-cost areas, the magic number seems likely to drop to
And, that means jumbo mortgages are going to be far more costly -- if you can get them at all.
It shouldn't surprise anyone that the
Will cutting back government financing hurt the housing industry? Maybe. The real problem is that the housing industry is still on life support, with the federal government supplying the dopamine.
Realtors say that home buying is anemic. Pending sales of existing homes have been up and down over the past few months. New home sales have been virtually nonexistent. This is the first spring real estate market since 2007 without a homebuyer tax credit, and while activity has picked up in some markets, home prices are still falling.
What the housing industry really needs is a country where jobs are being created and its citizens are going back to work. If you have a job, you can afford to buy a home and get a mortgage. It's far bigger bang for the buck than backing mortgages worth nearly a million dollars.
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Real Estate - The Market for Jumbo Mortgages Is Changing
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