For wealthy home buyers, mortgages are getting cheaper and easier. Not only are big-pocketed borrowers paying lower standard rates on the high dollar value loans known as jumbo mortgages, but lenders are now requiring even smaller down expenses and, in some cases, they are waiving the mortgage assurance, too.
For months, lenders of mortgages have been charging interest rates that are lower than what average borrowers give. The Mortgage Bankers Association reports that the usual rate on loans, mortgages of $417,000 or more was 4.24% last week, compared with 4.36% for conventional 30-year, fixed-rate mortgages.
Now some lenders have reduced the necessary down expenses on these loans to as little as 10%, down from 20%. In some cases, these lenders may not even need loan borrowers to buy private advance insurance, a precondition for almost anyone who takes out a low down payment loan.
For lenders, giving a loan to someone with a lower credit score, or with less cash down, is also a gamble worth taking. Big loan borrowers have better track records when it comes to repaying their loans and they default at a much lower charge.
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