Refinancing a Jumbo Loan In Today’s Market

Mortgage101

Fewer and fewer homeowners with jumbo loans are underwater these days, making it possible for them to take advantage of today’s low interest rates. In fact, recent data from Zillow.com showed that during the first quarter of 2013, just 20.6 percent of all Americans with jumbo loans (those over the conventional loan limits of $417,000 in most parts of the country) owed more than their homes were worth. That’s down significantly from 32.3 percent one year earlier.

And in five of the nation’s major metropolitan areas, 10 percent or less of jumbo-loan borrowers are underwater. San Jose, Calif. Led the way with only 5.8 percent owing more than the value of their homes. Boston had 6.3 percent, Denver had 6.6 percent, Dallas-Fort Worth had 7.6 percent and San Francisco had a rate of 9.6 percent.

Plus homeowners are underwater by much lower percentages these days as well.

“Nationally most people in negative equity are in relatively shallow water, with less than 20% negative equity,” said Zillow chief economist Stan Humphries in a statement.

For those that have now cleared the barrier and have positive home equity again, standard jumbo refinance loans are available. And with rates on larger mortgages averaging around 4.5 percent, borrowers can save thousands.

Mortgage modifications are the best option for those who still have negative equity. If homeowners have loans owned by Fannie Mae or Freddie Mac, they can take advantage of government programs that offer help to those who are have loan-to-value ratios of up to 120 percent. Most private lenders have their own mortgage modification programs as well. Wells Fargo, for example, is offering refinance loans to borrowers with up to 200 percent loan-to-value ratios. Underwater jumbo loan borrowers can contact their mortgage servicer to find out if they qualify for today’s historically low rates on a refinance loan.

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