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Conforming Loan Limits Will Most Likely Increase This Week
February 12th, 2008 categories: Real Estate Finance, Real Estate News
Late last Thursday, the Economic Stimulus Package was finally approved by the Senate. Now the bill is back on Bush’s desk. He is expected to sign it on Wednesday in hopes that it will help the housing market get back on track.
As part of the package, H.R. 5140 provides a new provision to temporarily raise the limits for loans that may be purchased by Fannie Mae and Freddie Mac through December 31, 2008.
While the HUD has 30 days from finalization of the bill to release the new loan limits in each area, it is suggested that it will be 125% of the median home price up to a maximum of $729,750. Given that the median home price of San Diego is currently $589,300, it is likely that San Diego will qualify for a new conforming limit of $729,750.
What does this mean to you? For people who currently have mortgages above $417,000 and need to refinance, it will be easier to qualify for stable mortgages. In addition to easier qualifying guidelines, interest rates for conforming loans are typically 1 to 1 1/2 percent lower than for jumbo mortgages meaning that most people will qualify for a fixed rate mortgage in the mid 5% range and under 5% for an adjustable rate mortgage.
For people in the market to purchase a home, this is a HUGE GIFT. If the limit is raised to the expected $729,750, someone with good income and a good credit score, will qualify for as little as 5% DOWN PAYMENT to purchase a $750,000 home with a fixed rate mortgage in the mid 5% range.
Not only are the rates lower and the required down payment less, the reserve requirements are lower too. Combine this with sellers in distress and/or bank owned properties, and you have a window through the end of this year to negotiate a phenomenal deal.
It is unclear so far if the limit will also be raised for multiple units (i.e. duplex, triplex) but most expect the unit limits to increase in proportion with the increase of conforming single family limits.
Although the Economic Stimulus Package is designed to bail out trouble homeowners and spur the economy, it also offers an incredible opportunity for others to realize the American dream of homeownership if they are in a position to purchase a home before the end of 2008.
Lysa Catlin
CMC Finance, Inc.
(858) 456-3000
Other Related Reads:
Great Condo Deals in Downtown San Diego
Craigslist Gold Diegger…A Good Investment?
2006 vs 2007 Downtown San Diego Condo Sales Statistics
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Carnival of Real Estate – 78th Edition…
Welcome to the February 18, 2008 edition of carnival of real estate (#78!)
This is the second time LakePlace.com’s Pine Needle Lawn has hosted the carnival – and we are happy we have the opportunity to get back on the merry-go-round! I tr…
I found your blog on google, and read a few of your other posts. I just added you to my Google News Reader. Keep up the good work. Look forward to reading more from you in the future.
The Broker – Thanks for the feedback! The market has gone through and is going through some interesting changes. I think buyers and sellers need educated and experienced agents/brokers now, more than ever.