Conforming Loan Limits To Increase
Since August 2007 non-conforming or jumbo loans have been priced significantly higher than they have been in the past due to "liquidity issues". The House and Senate voted to increase the conforming limit to 125% of the median home price in all market areas, and set a cap of $713,000.
We should see these changes implemented by March of this year. The reason for the delay is that, currently, HUD does not track median home prices. Typically, HUD programs are based on income, and as such, they track median income levels. The will need this next 30 days or so to obtain the median home price data that they need, and both FHLMC and FNMA will need the time to model the impact the changes will have on their loan portfolios.
Nationally, we should see this stimulate both purchase and refinance activity for borrowers financing between $417,000 and $713,000. Locally, 125% of the median home price for King County and Snohomish County equates to $493,000, an increase of $76,000 above the previous limit of $417,000.
More buyers will be able afford higher home prices, and this should have a positive impact on property values between $550,000 to $750,000.
So a $493K mortgage today @ 6.875% Jumbo Rate = $3,238.66 if the limit was raised today to the proposed $493,000 then this same buyer would get 5.375% on that same loan for a payment of $2,760.66! That's $478 A MONTH SAVINGS!!!! Or a borrower could purchase a home costing roughly $70,000 more with this savings.
David Mordue - Liberty Financial Group - 425.953.4009 - www.dreamhomewa.com - davidm@lfgloan.com
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