Question: Okay… I’m trying to teach myself a little more about RE. I THOUGHTI knew a fair amount but the longer I stick with this news group themore I find I don’t know as much as I THOUGHT I did.

Question(s): Of the types of morgages, what are the KEY differences.Specifically, what is the difference of a JUMBO 30-yr fixed vs a”standard” 30-yr fixed? Is it just the SIZE of the loan? And whatabout “1-yr” loans? Are they adjustable with “a rate for 1-year” typeof loans? Are they “1-year” loans? Are there other “lessconventional” but still “standard” types of loans? I don’t meando-it-yourself stuff, but stuff the banks and mortgage lenders use fromtime to time.

Thanks in advance.

Yes, there are. Some lenders will offer loans which are more lenientor have different underwriting criteria (the standards which must bemet to approve a loan) than others. Frequently, these lenders aresavings and loans or banks which do not sell their loans after theyoriginate them. Loans which are sold on the secondary market (theloan origination between you and the lender is the primary market)are usually sold to quasi-governmental agencies such and FNMA (FannieMae) or Freddie Mac. These loans which are sold must be “conforming”,meaning that they must be underwritten in accordance with the agenciesrequired standards.

Hope that helps! You’ll be able to find further information at ourweb site should you need it. As for your first question, The difference between a JUMBO 30-yr fixedvs. a “standard” or “conforming” 30-year fixed loan is mainly due to theamount of the loan. The cut-off point between the two is $203,150 andis the amount at which the Government has control over in the form ofa secondary mortgage market. In other words, Loans under the amountof $203,150 can be sold in a secondary market which is controlled bythe Government through “Fannie-Mae” and “Freddie-Mac”. This offers amore competitive market for loans of this size and thus, keeps theirrates sligtly lower than those for JUMBO 30-yr. fixed loans. Jumboloans, by the way, are bought by investor groups such as Prudential,Ryland, and numerous others. Generally, Jumbo Fixed loans are approx.375% – .500% higher than their conforming counterparts.

Now for your questions on 1-year loans, These loans are “AdjustableRate Mortgages”, which are fixed for the first year at a lower interestrate and then will adjust to a rate that is comprised of a Margin overan index. The index can be one of many in our market such as: The 1Year T-Bill; the 6 Mo. L.I.B.O.R.; the 11th Dist. Cost of Funds; or the6 Mo. C. D.. These loans can also be JUMBO or CONFORMING as well.

I hope that this information helped and I will be posting an updatedMortgage Rate Sheet every few days within this newsgroup so keep and eyeout for it, it should help you get a clearer picture on the MortgageLoans overall.

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