The economic stimulus package being discussed by Congress and the President may have a huge benefit to Marin home buyers and current Marin homeowners. In addition to tax rebates, another element of the package offers to increase the limit on Federal Housing Administration (FHA) loans and loans that Fannie Mae and Freddie Mac can buy. The new FHA and Fannie Mae/Freddie Mac loan limits would be increased to $729,750 under the current proposal.The increased loan limits could provide for a greater financial benefit to Marin homeowners than the rebates being considered. Many Marin homeowners were forced to settle with what is known as a “jumbo loan” when they purchased or refinanced their home due to the loan balance exceeding the maximum conforming loan limit (currently $417,000).

If the current proposal is signed into law, it may allow for Marin homeowners to refinance their current jumbo loan rate into a conforming loan rate. The spread between the two types of loans is approximately 1% for a 30 year fixed loan.

The proposal would also allow buyers in the market, looking to finance a property with a loan of $729,950 or less, to make the purchase more affordable than it otherwise would have been under the current law.

If the legislation passes as proposed, I expect to see increased refinancing by Marin homeowners and more activity in the housing market.

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