There is both good and bad news about loan limits headed your way and much of it will depend on where you are in the country. If you don’t like the news…then don’t worry, I’m projecting more changes will be on their way. As with most changes in lending these days, as one opportunity opens another one closes, be sure to use the ones that are open while they last…
Last year the economic stimulus package brought about an opportunity for home-buyers/owners in high housing cost areas to buy or refinance with premium interest rates. The jumbo loan market had all but dried up and there was an immediate need in the marketplace for these loans. We did and continue to do many of these loans; it was an impact-full market adjustment that opened up money to the marketplace. Well, as of the end of this year, those loans are gone. Many lenders are cutting them off early because the loan must actually be delivered to Fannie/Freddie by the 12/31 cutoff. I have seen some sources already stop accepting rate locks on these loans and I would expect to see most following very soon.
With that said both the GSE’s (Fannie Mae and Freddie Mac) and FHA loan limits will be changing starting in the beginning of 2009. While the limit adjustments have not yet been determined it seems to be certain that if we are comparing these limits to the “pre-stimulus” adjustments than they will all be going up. When compared with current loan limits most think that some will go down and others up. The rumors (and I caution this is just rumor, there is no hard facts available yet) are that we will see a minimum increase in all areas to $417,000 (meaning that the lowest ceiling for FHA will be the current standard conforming loan limit) and that high cost areas will have loan amounts to $650,000.
Again, I would expect that there will be further changes coming during 2009 as the political power shifts. I will keep everyone informed as this information turns from speculation to facts. In the meantime, the good news is there are options for folks who need jumbo loans now. Well qualified home buyers in high sale price areas are actually the focus of many portfolio lenders since they are being somewhat left out of the market. We have access to very competitive rates on loans as high as $2,000,000, as always good credit and a down payment are important parts of gaining access to these premium loan products. Call me with any questions or scenarios.
--Keith
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