Jumbo loan limits were first developed in 1970. At that time the Federal Government approved Fannie Mae to purchase residential mortgages. Then Fannie Mae worked with Freddie Mac to develop national standards for mortgages and those norms are still referred to as conforming loans. Until recently, the typical jumbo mortgage loan rate was capped at a $417,000 limit.

However, as a direct result of the Economic Stimulus Act of 2008 (ESA), the ceilings on jumbo mortgage rates have been raised. Congress authorized a temporary increase to the conforming loan limits in high cost regions defined by the median home sale price. This move provides more financial flexibility for consumers in regions with higher than average home values such as California. The revision to the jumbo loan maximum is currently in effect through December 31, 2010. The limit is now $729,750 for 1-unit single-family properties.

Pros and Cons of Jumbo Loans

Consumers need to properly evaluate both sides of the jumbo loan coin to ensure that the loan is right for them and their housing needs. Some pros to securing a jumbo loan include:

• Jumbo loan mortgages are just as easy to secure as conforming loans as long as the applicant has a good credit history and meets the income guidelines necessary.
• Jumbo loan mortgages can help finance the purchase of a dream house sooner than later.

The disadvantages of opting into a jumbo mortgage rate include:

• Jumbo loans are considered to be a higher risk than traditional mortgage rates. Lenders will charge borrowers more in the form of higher interest rates for the privilege of borrowing larger than average sums of money.

Jumbo Loan Tips

If you are considering financing the purchase of your dream home with a jumbo mortgage rate, here are some helpful tips to make the task easier:

• Check your credit score as those with the highest credit scores get charged the least amount of money in the form of mortgage interest.
• Examine your household budget to determine how large a jumbo mortgage loan repayment you can comfortably handle on a monthly basis.
• Before searching for jumbo mortgage loans, make sure to organize all your financial paperwork including pay stubs and bank records as your lender will need it.
• Comparison-shopping is the best way to find the cheapest mortgage rates out there. Once such portal that can help you on your quest is Mortgage Marvel.