The economic stimulus package temporarily increases the conforming loan limits for Fannie Mae, Freddie Mac (GSE’s) and Federal Housing Administration (FHA) loans. The stimulus package signed into law raises the FHA and conforming loan limits to as high as $730,000 in high-cost areas. By increasing the loan limits, borrowers will see immediate relief with new liquidity in the mortgage market and the nation will see an additional 300,000 home sales. Research shows that an increase in the FHA limit would enable an additional 138,000 Americans to purchase homes, and 200,000 families to refinance their homes safely and affordably.
Increasing the loan limits is critical to bolstering California’s housing market. These current limits are preventing many homeowners from refinancing their loans. Additionally, raising Fannie Mae and Freddie Mac’s (GSE’s) conforming loan limit will provide immediate relief to borrowers and alleviate downward pressure on current housing markets. For instance, increasing the GSE loan limit could result in more than 300,000 additional home sales and strengthen current home prices by two-three percent.
The critical role that GSEs play in providing liquidity to the mortgage market has never been more evident than it is today. The national sub-prime meltdown has had a dramatic impact on both the cost and availability of mortgages in many markets. Since August 2007, the interest rates for jumbo borrowers have been more than 1 percentage point higher than conforming loans, which can cost homeowners hundreds of dollars a month in higher interest payments.
Rest assured that I am following this story closely and I am hard at work preparing the tools and resources you’ll need to make the most of this important legislation. Please feel free to call me today to discuss your options and explore the possibilities.
For more information, please call Heidi Rivas of Crown Home Loans at 661-287-9888 or visit www.LoanGal.com.