30 Year Mortgage

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30 year mortgage rates are at historic lows. One can find rates from most banks under 5 percent. Last week's Primary Mortgage Market Survey released by Freddie Mac has 30 year rates at 4.78 percent, down from 4.85 percent from the week prior. The survey is based on first-lien prime conventional conforming mortgages with a loan-to-value of 80 percent.

Conforming loans are mortgages under a certain dollar amount that either Freddie Mac or Fannie Mae purchase from banks and lending institutions after the loans are made to home buyers.

Effective November 2008, there are two sets of conforming loan limits provided for first mortgages - general conforming loan limits and high-cost area conforming loan limits. General conforming loan limits are $417,000 and high cost area loan limits are $625,000.

Loan limits in Alaska, Guam, Hawaii, and the U.S. Virgin Islands are set even higher due to the high cost of housing in those areas. General conforming loan limits are $625,000 and high cost area loan limits are $938,250.  

These limits are for single family dwellings. Two to four family dwellings loan limits are set even higher.

Rates on 30 year jumbo mortgages are higher than 30 year conforming loans, especially now because the market for loans packaged together and sold to investors has pretty much been frozen since the sub-prime mortgage meltdown of last year.

The process of packaging loans together and selling them to investors is called "securitization."  This process frees up capital for banks and lending institutions to make more loans to home buyers.
Author: Brian McKay
April 8th, 2009