JUMBO GETS BIGGER

Physician's Money Digest, May 15 2003, Volume 10, Issue 9

As home prices rocket, morehomebuyers are shopping for so-called"jumbo" mortgage loans.Jumbo loans carry a higher interestrate than their smaller siblings,partly because banks can't offloadthe risk by reselling them to agencieslike Fannie Mae and FreddieMac. The good news is that Fannieand Freddie have raised the limit on"conforming" loans that they willbuy from banks to $322,700, up 7%from $300,700 this past year. Theinterest rate on a conforming loancan be 0.25% to 0.5% lower thanon a jumbo loan, a reduction thattranslates into tens of thousands ofdollars in savings over the life of a30-year mortgage.