Conforming Loans vs. Jumbo Loans: Here’s How You Can Get a Lower Mortgage Rate on a Larger Loan

SAN FRANCISCO (KGO) – In the realm of mortgages, there is a clear line that you need to understand: there are conforming loans – these are loans with a ceiling of around $650,000 – and jumbo loans, which are for any amount greater than that.

Usually, jumbo mortgages have an interest rate about half a percent higher than a conforming loan, but not now. If you know where to look, jumbos are on sale.

Joanna DeCelles has just bought the house of her dreams.

“I was really, really lucky, I’m really grateful,” she told 7 On Your Side.

Her son, Zane, makes the house his own by performing perfect cannonballs in the pool.

DeCelles found the right home, but finding the right mortgage wasn’t easy.

“Well, I’m a full-time mum,” she says, “so I don’t work and usually to get a mortgage you have to have a job, so that was a huge, huge problem.”

She says her first loan officer failed to get her a mortgage, then she partnered with Solidify Mortgage Advisors and got a loan.

Now Solidify is passing on information about a strange market quirk, an open secret in mortgage circles, that could help you pay less for your mortgage.

7 On Your Side asked co-owner Dusty Broderick to get a deal: “If you want to save money, take out a bigger loan?”

Broderick replied, “Yeah, and it’s ironic.”

Broderick says banks are offering lower interest rates to heavy borrowers.

He explains the math: “If you have a loan under $647,200, your rate is probably around five and a half years. If it’s over that amount, even $1, you might be looking at four and a half years. , right now, believe it or not.”

Now two things to keep in mind. First, it’s usually the banks that make those low offers on jumbo loans. Second, if you are considering a conforming loan, consider buying a more expensive home or making a lower down payment.

“Anecdotally, I’ve seen some banks say, ‘Hey, just take out a loan for $647,201,'” Broderick told 7 On Your Side, “and we can give you a lower rate. from one point. “”

So spending just one more dollar could save you tens of thousands of dollars over the life of the loan. This shouldn’t last. So if you’re looking for a mortgage now, do like Zane and go for it!

Check out more stories and videos from Michael Finney and 7 On Your Side.

Do you have a question for Michael and the 7 On Your Side team? Fill out the form HERE!
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