Jumbo Mortgages are loans that are over a certain dollar value set by Fannie Mae and Freddie Mac. This dollar value, known as the “conforming loan limit,” helps to define the loan sizes that these two government sponsored enterprises will guaranty in an effort to bring liquidity to the mortgage market. Jumbo loans are traditionally used to purchase “luxury homes” because the dollar value set by Fannie Mae and Freddie Mac is higher than most average home prices in the area. Due to the larger loan amount, there are usually higher interest rates associated with jumbo mortgages.
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