A Jumbo Loan is a mortgage with a loan amount exceeding the conforming loan limits set by the Office of Federal Housing Enterprise Oversight (OFHEO), and therefore, not eligible to be purchased, guaranteed or securitized by Fannie Mae or Freddie Mac. OFHEO sets the conforming loan limit size on an annual basis.
Also referred to as "Jumbo Mortgage".
Jumbo loans are often securitized by institutions other than Fannie Mae or Freddie Mac. These securities carry more credit risk than those issued by Fannie Mae or Freddie Mac, and therefore, trade at a yield premium which translates into slightly higher interest rates. However, in recent years the spread in interest rates between jumbo and conventional mortgages has been reduced.
Depending on where you are in California, the highest conforming loan limit is $729,750....which means a loan higher than this would fall into the Jumbo loan category.
At Ocean Pacific Capital, we do Jumbo loans up to $2 million, and the rate today is as low as 3.75%. For those of you that have an existing mortgage that is at a higher interest rate than this might consider re-financing, and a new Jumbo loan might work. E-mail me with details and we can see what is best for you.