Jumbo Mortgage Rates Better Than Ever for Real Estate Investors: - Near the pinnacle of the housing fallout of the last decade, the federal government pulled all sorts of stops to try and stem the tide of bank failures and foreclosures. The Troubled Asset Relief Program, (TARP), Home Affordable Mortgage Program (HAMP) and HARP 1.0 and 2.0 became acronyms for a jumbo rates for investorstroubled housing market.

And the biggest elephants in the room, Fannie Mae and Freddie Mac were taken into conservatorship by the government. Slowly and yes surely however, the economy appears to be on the mend, and Fannie and Freddie are returning to profitability once again.

The mortgage giants Fannie and Freddie regrouped how they did business primarily by reverting back to their olden days and laid clear underwriting guidelines that required borrowers to have unconventional characteristics for the day such as having a job, good credit and some down payment. The credit quality of the loan meant fewer foreclosures and both began to charge additional fees to increase income. These so-called government sponsored entity fees, or “G-fees” added to individual conventional mortgages has reached a peak to the point that rates on jumbo mortgages are at or below their conforming counterparts.

Jumbo mortgages, loans above the conforming loan limit which today is $417,000 in most areas, have historically been one-quarter to one-half percent higher than conforming mortgages. These loans aren’t bought and sold in the secondary market like Fannie and Freddie loans are and are funded by private investors. The addition of G-fees over recent years combined with near historic rates has turned the rate table a little topsy turvy over the past year or so.

That means real estate investors can buy and finance real estate with interest rates at or below a conforming loan amount. At least in the current market. The G-fee tide may be slowing a bit as incoming FHFA Director Mel Watt has long opposed increasing G-fees because they add to the cost of financing a home. But for now, jumbo rates are about as competitive as they’ve ever been.