Mortgage rates like jumbo rates vary significantly, with the loans having options such as fixed rate, which further vary in that the rates at times change. Normally, the rates established at each and every time are based on the changes in the Truth in Lending Laws, the Treasury Bill Rates, as well as the common market rates. The jumbo rates tend to rise above a specific limit as it evidently set by the Freddie Mac and Fannie Mae programs.
Jumbo rates, otherwise referred to as non-conforming mortgage loans, they accrue interest on top of the ‘originator premium fees’. Note that the jumbo rates are calculated in units. For instance, if a single family applies for the Jumbo mortgage, it could only qualify for $300,000 as per the predetermined limits. These limits are calculated based on the maximum amount the borrower is allocated by the lender.
Jumbo loans are often characterized by extremely high rates of interest, reason why Fannie Mae and Freddie Mac are not legally mandated to fund jumbo loans above the ‘set market limits’. Further, the Federal National Mortgage Association (FNMS) and the Federal Home Loan Mortgage Corporation (FHLMC) do not have the power to fund these loans over the set market limits. As a result, the mortgage interest rates on jumbo loans could increase significantly.
It is for this reason that borrowers are advised to consider setting limits on the loan amount borrowed so as to avoid expensive mortgage rates. While there are several options under the jumbo loans available, it is advisable to shop around and check the rates of mortgages of other loans. Such options available include the common Adjustable Rate Mortgage (ARM).
Adjustable Mortgage Rates are predetermined agreements that connect borrowers and lenders whereby the lenders agree to lend mortgage rates that are significantly lower than the prevailing market rates. These rates could be applicable at the start of the borrowed amount, but the borrower could agree to the ARM rooted from the market rates, in addition to the prevailing loan terms and conditions.
Most people go for fixed rate mortgage loans since the rates remain constant throughout the mortgage tenure whether the market will fall or rise. What this means is that if you consent to a 5.76% rate, you will continue paying this rate throughout the tenure of the loan whether the economy will change or not. Therefore, when looking for mortgage rates, the best thing to do is to shop around so that you can land on the best possible deals that will fall within your budget.