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Interest rates for mortgages often are
the primary concern for consumers,
particularly those who require
nonconforming or jumbo products.
Recently, the rates for various products
have been in the following ranges:
• Conforming: Fannie Mae products
(anything under $417,000) are between
4. 25 percent and 4. 5 percent.
• High-balance conforming: Fannie Mae
products (loans bet ween $417,000 and
$625,000) are between 4.375 percent
and 4.625 percent.
• Jumbos: Not sold to Fannie Mae, these
rates have been between 4. 5 percent
and 4. 75 percent.
Mortgage originators working with
the jumbo portion of the market must
find a more affordable solution for their
clients. There are three potential ways
in which brokers can work on lowering
the jumbo rate.
1. Work with investors willing to
give discounts: One way to help get
clients lower rates is to sell your loans
to investors who offer discounts.
For instance, a lender may offer a
0.25 percent discount to jumbo loans
for clients who open a checking
account and include auto-deduct
for their mortgage payments.
2. Work with banks that give discounts
for additional business: There are
several private banks that offer
discounted rates to clients who
meet the private banking criteria.
These banks like to entice the client
with lower mortgage rates, so they
eventually can establish banking
relationships with them. Generally,
they will ask to see $500,000 in
liquid reserves after closing.
3. Consider an adjustable-rate mortgage (ARM): These products are fixed
for five, seven or 10 years. They are
amortized over 30 years. They offer
bigger discounts currently than in previous years. Many consumers only keep
their mortgage for three to five years,
and after that, they often refinance,
take cash out, marry, divorce, etc.
One of the biggest benefits to ARMs
is their low initial interest rates. For
example, this past fall, 5/1 ARM rates
By Julie Teitel