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Luxury Homes and Jumbo Loans

Would you believe that Jumbo Loans are helping drive the real estate recovery? According to a recent article in the Wall Street Journal, “Home sales using a jumbo mortgage had year-over-year growth of 7.9% through September, compared with 2.7% for nonjumbo sales.” In other words, metro home sales of over $1+ million were 28% higher this September over last year. Home sales less than $1 million rose 8.5% over last year.

What is contributing to the increase of luxury home sale and jumbo loans?

Jumbo loan limits have changed. On October 1, 2011 the jumbo conforming limit of $729,750 in “high cost” areas was reduced to $625,500.Investors bought lower priced homes that were flooding the market – many times purchasing with cash. These swooped up purchases have driven down inventory and driven up listing prices of the homes  – sometimes popping the home’s listing price into jumbo loan territory. Less inventory also creates competition for the available listings and making higher priced luxury homes a viable purchase option.

Currently, it is more difficult to secure a jumbo loan backed by Fannie Mae and Freddie Mac because of their stringent lending standards. However, smaller lenders are returning to lending jumbo loans.

According to the Wall Street Journal article, “While tight credit remains an obstacle for the average buyer, jumbo buyers are sometimes finding the opposite. Capital Economics Ltd., in a recent research note, found that jumbo loans are going to borrowers with credit scores as low as 700, compared with 720 or higher previously, and that financing has generally reached $2 million from a previous upper limit of $1.5 million. ‘If they are willing to make jumbo loans knowing they will carry the credit risk themselves, it’s a sign of their confidence in the housing recovery,’ says Paul Diggle, a property economist at Capital Economics.”

I know this can be daunting, but that’s what I’m here for – to answer your questions and to help you find the best home for you on the Outer Banks.

North Carolina Jumbo Loan Limits by County

By Bankrate.com
County name

FHA loan limit

Fannie Mae-Freddie Mac conforming
loan limit

Camden

$729,750

$625,500

Currituck

$458,850

$458,850

Dare

$460,000

$417,000

Hyde

$483,000

$483,000

Pasquotank

$729,750

$625,500

Perquimans

$729,750

$625,500