Luxury Home Transactions Flowing Through More Quickly

Many housing experts have proclaimed that housing is on a solid rebound. Additional evidence to support that claim is the fact that jumbo mortgage closings have risen considerably in 2012 and are projected to keep that upward trend intact through 2013. The reason could be attributed to favorable terms for borrowers purchasing high-end homes.

Fannie Mae and Freddie Mac's has a defined conforming loan limit of $417,000 and jumbo loans are home loans that are higher than those offered by the two GSEs. For the majority of U.S. real estate, that is a loan amount above $417,000, or $625,500 in designated high-cost markets.

"Three to five years ago it would have been a real challenge during the peak of the housing crisis to find financing for a jumbo mortgage and when you did, the conditions were at a maximum,. People with 800 credit scores, 20-percent down and assets were being sent away. Now with more lenders offering this program it has driven rates down to very attractive levels," claims Tim Reese, a real estate journalist.

Positive trending housing market
Housing markets hit hard during the crisis such as California, Las Vegas, Arizona, and Florida have seen home prices increase 20% year over year in some areas. Lenders have become less worried about the risks and are more concerned with originating loans than declining them since securitization has picked up.  This occurs when a lender packages a pool of mortgages together into mortgage-backed securities and sells them off to investors.

Qualifying for a jumbo loan is fairly common with at 20% down and credit scores over 720 or borrowers can opt for the FHA route instead in some areas where they were declined. In some high-cost areas such as parts of California, the Northeast, and elsewhere FHA-insured loans are able to finance as much as $729,750, providing an attractive choice for borrowers with smaller down payments and credit scores as low as 580.