According to financial publisher HSH.com, refinance mortgage rates on 30-year fixed-rate jumbo mortgages (home loans with a balance above the conforming loan limits) were down to 5.65% in late June, which is a seven-year low. In addition, lenders offered hybrid jumbo adjustable-rate mortgages with a 4.49% rate, fixed for five years.

Credit Suisse estimates that about 61% of all borrowers with 30-year fixed rate mortgages could lower their mortgage rate by 0.75 percentage point at current rates. And that probably goes double for those with jumbo mortgages. Pretty happy stuff, finally.

Jumbo Borrowers Left Off the Refinancing Bandwagon

Ordinarily, the spread between jumbo refinance mortgage rates and conforming loan mortgage rates is about half a point on a 30-year fixed-rate loan. But when the mortgage lending industry's crisis got into full swing, that spread increased to as much as 1.5%.

So while homeowners with conforming mortgages could refinance their loans and save money, many with larger loans couldn't. Jumbo borrowers have been sitting on the sidelines, writing those big checks each month.

Investors Lured Back

Today, investors are getting back into the jumbo arena. Redwood Trust, Inc., a publicly traded real estate investment trust (REIT), recently marketed the first jumbo mortgage-backed security since 2008. The $238 million residential prime jumbo mortgage securitization has helped breathe new life into a market that was flattened by the housing bust and financial freakout that followed.

Mortgage lenders should be able to supply more money and offer better terms to jumbo borrowers. The security was met with healthy demand, and Redwood is already working on a follow-up.

Jumbo Refinance Mortgage Can Pay More

Because jumbo mortgage payments are larger, a small interest rate reduction can make a bigger difference in your wallet.

For example, compare a $200,000 mortgage at 5% ($1,074 monthly mortgage payment) and 4.5% ($1,013 monthly mortgage payment). The difference on the payment is only $61. But on a $500,000 loan, the payment difference between a 6% loan and a 5.5% loan is $2,998 minus $2,839, or $159 a month.

Refinancing Options: Jumbo Hybrid ARM, Home Equity Loan, or Jumbo Conforming

If lowering your monthly payment is the top priority, a refinancing option worth considering is the jumbo hybrid ARM. If you're at 6% now and could get 4.49%, you can score some serious savings. $500,000 at 4.49% means a monthly payment of $2,530, or $468 a month less than the 6% rate. That's a BMW payment!

Or, as long as conforming rates have hit rock bottom, consider replacing your big fat jumbo mortgage with a first and second mortgage. You might be able to score a lower overall interest rate and monthly payment by financing with a 30-year conforming loan at 4.69% for the first $417,000 and a home equity loan or home equity line of credit for the balance.

Finally, don't forget to check if jumbo conforming interest rates are available in your area. In more expensive real estate markets, Fannie Mae and Freddie Mac have expanded their loan limits--in some cases to a maximum of $729,750. Check with a mortgage lender to see if jumbo conforming loans are available where you live.