If you have inquired about a jumbo mortgage over the past 6 months, you probably felt like you were hit with a brick when you heard the rate. During this time, it was very common to see jumbo rates at 7%, 8%, 9% and nearly 10% from the major banks. You were also likely quoted significantly higher loan fees.

In the midst of record low conforming mortgage rates, jumbo mortgage holders have been left out in the cold or forced to break their mortgage balance in two smaller loans.

Here’s the good news… just because you have a jumbo-sized mortgage doesn’t mean you have to pay a jumbo rate. Avoiding the high rates and loan fees of a jumbo mortgage is actually easy -- all you need to do is understand the reasons why jumbo rates are so high and follow the one simple rule.

Reason 1: Jumbo Mortgages are Wall Street Bound

The term "jumbo mortgage" was created for a Wall Street-bound loan. Mortgage loans are categorized into “buckets” based on the characteristics of the loan. These buckets include conforming mortgages, jumbo mortgages, and Government mortgages among others. If your mortgage balance is greater than $417,000, it falls into the jumbo mortgage bucket. After your loan is completed, your loan will be sold to an investor on Wall Street.

Reason 2: Jumbo Mortgages Must Meet Wall Street’s Requirements

In order to be eligible for purchase on Wall Street, mortgage loans must meet the requirements of their “bucket”. Requirements are in place for loan characteristics such as credit scores, property type, loan size, down payment and income of the borrower. A loan that does not meet these requirements is not allowed in the bucket and is not eligible for sale to Wall Street and will be declined by the lender.

Reason 3: Rates for Jumbo Mortgages Depend on Wall Street’s “Appetite”

Interest rates for each loan type are based on the risk characteristics of the loan, the guarantees to the investor and the price Wall Street is willing to pay at any given time for that particular type of mortgage. The price that Wall Street is willing to pay changes minute-by-minute just like shares in a stock... this is why mortgage rates change so frequently. Wall Street investors can invest in mortgages, the stock market, government treasuries and many other vehicles. Wall Street’s appetite for each type of investment is based on the risk and reward of each investment vehicle.

Reason 4: Wall Street has lost its Appetite

Imagine selling an item on eBay. When there are several buyers, you can expect a better price. When there are very few buyers, you can expect a worse price. Due to the subprime mortgage meltdown in 2007 and declining real estate values, there have been very few buyers for loans that do not carry a guarantee to the investors. The only loans that carry this guarantee are conforming loans (those under $417,000) and Government loans (FHA and VA). Since jumbo mortgages don’t carry a guarantee, they are perceived as having more risk to buyers on Wall Street. The lack of buyers drove rates on Jumbo mortgages as high as 10% towards the end of 2008. Wall Street wants the safety and lower risk of conforming and Government mortgages.

Finally…the NUMBER ONE RULE you must follow to avoid paying a Jumbo Rate

To avoid paying a jumbo rate on your jumbo mortgage, there is one simple rule you must follow… don’t get a Wall Street loan. I told you it was simple! A jumbo loan that is not headed to Wall Street is not subject to the ever tightening restrictions and high rates demanded by Wall Street investors.

“Where do I find a non-Wall Street Loan?”

The first thing you will want to do is bypass your neighborhood Big Bank in favor of a smaller, niche mortgage lender. Unlike Big Banks, niche mortgage lenders don't package their mortgages for Wall Street and this allows them to make their own mortgage lending rules. And, on top of that, mortgage rates from niche mortgage lenders are dramatically less than what Wall Street loans have to offer.

How much would I save?

The savings can be substantial The Private Mortgage Group offers affluent homeowners in Nebraska, Iowa and Missouri the Diamond Preferred Mortgage. Here is a sample of our current rates.

Diamond Preferred Mortgage Loan Amount	Rate with 1 Point	APR	Rate with 0 Points	APR
Up to $500,000	4.75%	4.86%	5.00%	5.02%
$500,001 to $650,000	4.88%	4.98%	5.25%	5.27%
$650,000 to $1,500,000	5.00%	5.11%	5.38%	5.39%

Compared to Wall Street jumbo loans, you could save anywhere from $500 to $2,000 per month with the Diamond Preferred Mortgage from The Private Mortgage Group. Over the course of just a few years, that adds up to thousands of dollars in interest savings.

Complimentary Refinance Analysis

Prior to making a decision to refinance your home, it important to know the costs and savings to make sure you will indeed save money. Through our complimentary analysis, you will see a comparison of your current loan and current refinance options. The analysis will show you payment savings, costs, interest savings over time, additional equity gained, breakeven period and more. Don't forget to ask about our no closing cost option.

In addition to much lower rates, the Diamond Preferred Mortgage loan has some great features that are not allowed on Wall Street loans.

Diamond Preferred Mortgage Features

· No disclosure of your assets

· No escrows for tax and insurance

· Interest-only option

· Purchase or refinance loans

Qualification Guidelines

· Loan amount below $1,500,000

· Equity in your home of 25% or more

· Credit score above 650 (700 if self-employed)

· Primary home or vacation home only

The differences between a Wall Street loan and non-Wall Street loan are dramatic. If you meet the guidelines above, you may apply for the Diamond Preferred Mortgage now for a complimentary refinance analysis to see exactly how much you can save with the Diamond Preferred Mortgage.

Four reasons jumbo mortgage rates are so high and the number one rule you must follow to get a jumbo rate as low at 4.86% APR