forget conforming - what about jumbo rates-

$440k is not jumbo and the rate you are being quoted is most likely a conforming rate. Shop around, you should be able to get under 6% for that loan amount.

I don't know about that. Every bank I have been to has said that anything over $417K is a jumbo. Do you know a specific lender that does not treat $440K as a jumbo?

is this for a co-op? how much of a down payment? what zip code is the purchase in?

if you are buying in most areas of nyc, 440k will not be jumbo. new rules as of early this year which take into consideration the average market price of the area you're buying in

The new rules have been pretty difficult to understand. They lowered the rate, but there are added fees thrown in, so it isn't as good of a deal as you think at first. It almost works out to points. There are definitely some people here that can explain it much more accurately and eloquently than I just tried to.

This is for a new construction condo in 11225 (prospect lefferts garden), 10% down. Now I'm totally confused. Out of the 3 banks we have talked with, not one ever said we would be under conforming rates. All of them quoted us for jumbo rates becuase the loan amount was above $440K. Somebody please explain

The "jumbo-conforming" loan theshold is a maximum of $729,750 for "high-cost areas" until 31 Dec although that doesn't mean that the rates being offered are as low as regular conforming loans ($417,000). Additionally, I believe there are credit, income and loan-to-value (LTV) criteria for loans to be considered conforming. In some cases it may make sense to structure as a conforming loan (first mortgage) and home equity loan.

Yes mapleques,
the new legislation say that through 2008 conforming loans are a percentage of the median household price. In NY that works out to be $729,750, as tricks notes. However, they are also correct in that the rate will not be as good as the traditional conforming amount of $417,000.

A real jumbo loan is still around 7% and did not drop much becasue fannie and freddie do not buy jumbo loans - the reason that we are seeing a drop in conforming loans is becasue the government decided to take over freddie and fannie essentially guaranteeing the security of those loans to buyers.

The reason that you are not getting a better rate is not becasue it is considered jumbo, it is probably becasue you are only putting down 10%. to really take advantage of a "conforming" loan, you should be putting down 20% and having the total loan amount coming under $417,000. If you can come up with the extra down payment, it will make a big difference in your rate .... you can probably get 5.5% today if you put down just $20,000 more.

Also, the new laws through 2008 are only for condos (as you stated that you were buying) so the $729,750 for "conforming umbo" does not appply to co-ops).

thanks for the advice thus far. Unless I am thinking about this wrong, putting down another $23K doesn't seem to be a benefit to us since we don't plan to keep this condo longer than 7-10 years. Its seems like paying the higher rate makes more since that paying the lower rate since the lower rate is only a benefit in the long term. Am I right?

I don't agree. 7 - 10 years.
If you could get a 6% rate instead of 6.375 on a loan of 417,000 that would mean $100 every month.
7 years, thats $8,400 saved.
Plus, it's not like the $23,000 is going to disapear, you will still get it back when you sell.
so, it's like you get back your 23,000 plus the $8,400 that you saved.
A lower rate is always worth it unless you have to pay more to the bank to get the lower rate. In this case you are just putting down a larger downpayemnt but you are getting the money back.

maplesques - you got some good advice above. You can qualify for the 440k loan as conforming agency jumbo at about 6.125%-6.25% today (if you tell which condo I can tell you if the buildng qualifies for a lower rate). Rates are very volatile so you should watch it carefully. I agree that the extra down payment to make it 417k will be more benficial. Your plan is to keep it for 7-10 years but there is always the "what if" factor. What if you dont want to sell it and rent it when the time comes? What if you hae a hard time selling it? etc...Those may be your plans but 7-10 years is pretty far away and who knows what will happen then. By putting theextra down for the lower rate you know youre fully protected with the lower payment. Of course it only makes sense if you have no problem putting the 23k down. sunny_hong@countrywide.com

lobo: the original rules for agency conforming didn't allow coops, but 2-3 months after or so, they changed it to allow coops.

Interesting, I was not aware.