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Bigger Loan Amounts, Lower Interest Rates: Jumbo Mortgages in 2013

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Mortgage Professional America | 09 Jan 2013, 02:01 PM Agree 0
Sales of luxury homes in the United States made a significant contribution toward the overall recovery of the housing market in 2012, and they are largely expected to play a similar role in 2013.
  • Barry Stoltze | | 09 Jan 2013, 08:23 PM Agree 0
    Discount points? The only time discount points should be 'encouraged' is if someone other than the buyer is paying for them. For eg., the seller, or an employer as part of a relo package. Otherwise there is almost never a case for discount points. Maybe Wells Fargo encourages discount points, but the large banks rarely look out for the consumer's best interests.
  • William Matz | | 11 Jan 2013, 06:14 PM Agree 0
    Barry, do the math. When rates are at a low point and the borrower is long-term, discount points make absolute, mathematical sense. As long as a borrower expects to be in the mortgage beyond the breakeven point (typically 4-6 years), points make sense. If the borrower won't be there long enough to break even, then he should not be getting a 30, but a 5/1, 7/1, or 10/1.

    In 2002-3, my clients were getting 20-30 yr fixed in the low 4's and 3's by paying points. they are not in trouble today. As always, the right choice depends upon the client's overall financial plan.

    With today's low rates the chances of refinancing to lower your rate in the future are nil. So for long-term borrowers, it makes good sense to buy down to 2.75% rather than taking 3.5% at no points/fees.
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