| A jumbo loan is a loan that is higher than the | | | | your local area in order to find a lender willing to |
| conforming loan limit. In California, the conforming loan | | | | finance your jumbo loan. |
| limit in 2006 is $417,000. However, because the price | | | | Expect a Higher Interest Rate |
| of homes in California has been skyrocketing over the | | | | Conventional loans are funded by government |
| last decade, some members of Congress are trying to | | | | sponsored entities, such as Fannie Mae and Freddie |
| raise California's conforming loan limit. Because of the | | | | Mac. Jumbo loans, however, are not sponsored by |
| high cost of homes in the state of California, jumbo | | | | these government agencies. Therefore, when you |
| loans are not so uncommon. This article explains what | | | | apply for a jumbo loan, you will receive a higher |
| you need to know when obtaining a California jumbo | | | | interest rate than you would have on a conforming |
| mortgage loan: | | | | loan because a jumbo loan represents more risk to |
| Location Matters | | | | your lender. |
| If you live in an area of California where the average | | | | Refinancing Will Be Difficult |
| price of a home is above the conforming loan limit, | | | | The conforming loan limit on a refinance mortgage in |
| chances are many more lenders will offer jumbo | | | | California in 2006 is $208,500. This means that you'll |
| mortgage loans. These high-cost cities will have a | | | | have to pay your mortgage more than halfway off |
| higher number of lenders that offer jumbo mortgage | | | | before you can refinance into a conventional loan. |
| loans. However, if you live in a part of California where | | | | Borrowers should keep this in mind when deciding |
| the average home price does not exceed the | | | | whether or not a jumbo loan is right for their needs. |
| conforming loan limit, you may have to shop outside of | | | | |