Super Jumbo Mortgages

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Interest Rates For Jumbo Loans & Super Jumbo Mortgages

While Interest Rates are rarely the focal point of a typical Super Jumbo mortgage borrower's shopping list (most focus on cash flow and tax benefits), lenders routinely charge higher interest rates on super jumbo mortgage products than they would for a borrower with similar qualifying criteria in a conventional jumbo loan, in large part to account for their risk and reduction of liquidity. Below $1,000,000, super jumbo mortgage rates are generally within 50 basis points (half of a percent) of an equivalent jumbo mortgage interest rate, however above $2,000,000 rates can be 1% to 2% higher or more.

Amortization Types

While historically super jumbo mortgages were primarily short term adjustable rate principal & interest mortgages, interest only options and payment cap or negative amortization loans (currently called "Option ARM" mortgages) were introduced to the category in the early 1980s to counteract typical 12% rates of the time. While 30 year fixed rate mortgages are available in the super jumbo category, they do not represent the majority of super jumbo mortgages. 3/1 ARM, 5/1 ARM, 7/1 ARM and 10/1 ARM Adjustable Rate Mortgages are more popular amongst super jumbo mortgage applicants than with the general public, however the greatest increase in originations as a category has been so called "exotic" Super Jumbo Mortgages. Offering interest only and negative amortization features, these loans allow borrowers to choose a lower payment option than a conventional principal & interest mortgage, often 10 to 20% lower in the case of interest only amortization and up to 50% lower or more in the case of deferred interest options.