How to borrow jumbo amounts without paying jumbo rates

Each year Fannie Mae/Freddie Mac set limits on the maximum-sized, single-family home mortgage that they will buy (now $417,000). Loan amounts that exceed Fannie/Freddie limits are known as jumbos and usually carry an interest rate that's about one-half percent higher than Fannie/Freddie's best rate. When Fannie/Freddie's 30-year fixed rate wandered around 6.0 percent, lenders typically priced jumbos at 6.5 percent. (Shop closely, since competition is forcing jumbo rates lower. Recently I've seen jumbos priced at just .25 percent over the Fannie/Freddie conventional rate. Remember, interest rate spreads for amounts, terms, and default risk fluctuate constantly. No fixed rules apply.

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