A jumbo mortgage is a loan that is above the limits set by the government, also referred to as a non-conforming loan. The cost of a jumbo loan is higher than a standard loan, so expect a higher interest rate for a jumbo loan. The home must also be located in a higher-cost area, which is a neighborhood that can support a higher mortgage.
Each year, Freddie Mac and Fannie Mae review and set the loan limits for the upcoming year. Through December 31, 2010, the jumbo or super conforming loan limits are on amounts greater than $417,000 up to $729,750. This is a temporary maximum limit, set by the 2008 economic stimulus package. The normal jumbo amount is $625,000.
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