Better Financing for Luxury Homes

This is good news for those of you looking to buy a luxury homes this spring. Check out this article from Kimberly Blanton at the Boston Globe:

Fannie Mae and Freddie Mac agreed last Friday to buy more jumbo loans from major lenders, making it easier for borrowers to get these kinds of mortgages.

Freddie Mac said it expects to buy up to $15 billion of jumbo conforming loans from Wells Fargo & Co., Chase, Citi Bank, Washington Mutual, and other lenders.

None of the banks were able to provide rates for the jumbo conforming loans. But Tom Kelly, a spokesman for Chase, said the Freddie Mac agreement “is going to make more money available in high-cost markets and the rates are obviously going to be less” than they have been since February when Congress first raised the size of mortgages Freddie and Fannie are able to buy.

Since the increase, jumbo mortgages have been more than 2 percentage points higher than other conforming mortgages. Plus they have had stiffer requirements, including higher credit scores and bigger down payments.

“The idea is to provide more liquidity, to lower the rates, and provide more money from the investor side,” said Jon Skarin, director of federal policy for the Massachusetts Bankers Association. For the program to work, he said, rates “are going to have to come down significantly, and we’ll see.”

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