Somerset County has a maximum conventional loan limit of $625,500. Any loan amount over $417,000 is considered "Super-Conforming" or "Agency-Jumbo." With most lenders, there is a very slight rate increase. However, there are also lenders which I work with who will not impose such a rate increase. It all comes down to the specific lender, whether they sell their loans to Fannie Mae and/or Freddie Mac, and their guidelines.
My advice would be to choose a lender who offers a "float down option" for your rate. I say this because rates have been moving more frequently than usual (both up and down). Lock your rate to protect yourself against unforeseen market shifts, and if rates were to improve after you lock you'd still have the ability to obtain the lower rate. Essentially, it's the smartest move you could make and many banks simply don't offer this option.
If you'd like me to compare mortgage pricing for you, I work with just over two dozen lenders which simplifies the entire process and ensures you receive that great rate that you deserve. To speak further, please call or email me at your earliest convenience.
Paul F. Marzolla
Sr. Mortgage Consultant
I'm going to expand on what Gerald was discussing below. The following may not be applicable to your specific scenario, but may help.
The pricing on rates has been a little crazy as of late. We are seeing Agency (Fannie and Freddie) ARMs yield lower rates on the 7/1 than the 5/1, which is not typical. We are seeing some days where the Agency high balance >417K<625,500 ARMs are pricing better than the conforming ARMs (<=417K). The point I'm making is that you can actually get a rate on a high balance, or even jumbo, that is less than the rate on conforming loans.
The loan that I am finding is pricing best (at least for JPMorgan Chase) is the non-agency (does not get sold to either of the agencies and is portfolioed by Chase) 7/1 interest only ARM. You need a loan >625,500. The rate has been 0.5 - 1.25% lower than any if the Agency ARMs recently. If your scenario allows you to take a higher loan, you could have the note drawn at 625,501, then pay the principal down with no penalty to bring the loan to a more comfortable figure after closing after you locked in the lower rate that wouldn't be available on the lower loan amount. A few things to understand:
1. There is no penalty for principal curtailment
2. The payment on interest only is recalculated monthly based on the balance
3. This technique might not be applicable to all scenarios. You need to be purchasing a property with a value that can support a loan of 625,501 at 70-80% loan to value (depending on credit score and property type).
What it comes down to is that you need a good mortgage banker to discuss all if the options and have an understanding that with the market being so volatile, the loan products and pricing can change intra-day, so until you lock, nothing is set in stone.
If you have questions around this posting or regarding any other mortgage related questions, call or email me.
Chase Private Client
It is very possible that you may find a Community Bank that will hold the loan in their portfolio if you are a strong applicant and there is little risk of default. If that is the case, it is also likely that they will offer a rate that brokers or bankers can not since they will not retain servicing of the loan.