Agency Conforming Loan – Best Used by 12/31/08

Posted on October 14, 2008 | by Denny Oh

Have you heard of an Agency Conforming Loan?  Well if you havent and youre thinking about buying a home, READ THIS!  Earlier this year, the soon to be former President Bush, authorized a Stimulus Package that created a new loan “ the Agency Conforming Loan.  Generally speaking, you have three loan categories “ Conforming, Agency Conforming and the Jumbo.

The traditional Conforming loan, is anything below $417,000.  This provides the lowest interest rates and is typically easier to acquire.  The Jumbo loan has also been around for a while and that value is anything above $697,500.  This has become harder to qualify for and you pay about 1“1.5% premium, over the Conforming loan.

The Agency Conforming loan covers anything over $417K and below $679.500.  The rate is much more favorable than the Jumbo and is about 0.25“0.50% higher than the Conforming rate.  Obviously these rates change, but this will at least give you an idea of where things are.  Unfortunately, this Agency Conforming loan limit is going to decrease, come the new year.  Most people believe it will be in the low $600K range, or slightly below that for San Diego.

So if youre thinking about buying a home and youre going to finance $400“700K, you might want to do that sooner than later.  Waiting another few months for a possible price reduction might not be worth the rate hike.  Plus, with stricter lending guidelines, you might not be able to get a jumbo loan anymore.  Do the math “ a 0.50“1% increase creates a huge change in your monthly payment.  And more than likely, waiting to buy a house wont provide the returns youll need to counter the rate increase.

If you have any questions about mortgage loans or real estate, please contact me.  [email protected] 858“243“2092.  I provide honest and factual information “ not just what I think might happen.  And its all FREE.

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