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Rising Home Prices Have Buyers Considering Taking Out Jumbo Loans
Home prices have jumped by nearly 25% across the nation, and the housing supply is limited. This is resulting in bidding wars becoming a common part of the home buying process. Buyers are feeling pressure to push their budgets to the max in order to win one of the few available homes on the market. A new surge of interest in jumbo loans has been created as homeowners search for creative ways to finance increasingly expensive real estate.
30 Year Fixed Mortgage Rate
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15 Year Fixed Mortgage Rate
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Jumbo loans are mortgages with a value over $550K. There are some very expensive parts of the country where a jumbo loan is a mortgage valued at more than $800K. With home prices rising rapidly and bidding wars becoming standard operating procedure, some buyers are turning to these super sized home loans to finance their new homes. However, jumbo loans come with several disadvantages that buyers should consider. They usually come with higher interest rates and higher down payments. There are also the jumbo sized monthly mortgage payments to consider.
Mortgage delinquency rates have fallen drastically as the economy continues to recover from last year’s COVID lock-downs. Delinquencies for government backed and conventional mortgages have dropped to their lowest rates since the pandemic began in March of 2020. Government backed loans have recovered from delinquency at about twice the rates of conventional loans. Homeowners in late stage delinquency have shown the greatest improvement in the past quarter, as the favorable real estate market gives them exit options.
Rent prices have been rising steeply throughout the nation. In many mtero areas, it is currently more expensive to rent than to buy. However, home ownership comes with many hidden expenses. Mortgages can be hard to obtain and available housing units are in short supply. Analyzing your local market is key if you want to make the best decision.