I just read an article that made me feel like there may be more help on the way! As you all know the higher loan limits seems to be more of a carrot than an answers to our problems. With all the add ons to the fees, LTV restrictions, ratio limits, etc, etc.......
Well according to an article in Orgination News, by Brian Collins, congress is working on actually raising the $417,000 limit to $625,500 and bringing back the $729,750 limit as the stimulus limit. This limit would have all the conditions listed above, BUT the $625,500 would be priced and underwritten just like the current FNMA- FREDDIE loans up to $417,000 are now.
This would be a big help in the both the refi and purchase markets. One example of the benefit is if you are paying off a 1st and non purchase money 2nd, the second is considered cash out and is thus limited to $100,000. So let's say you have a $400,000 first @ 6.5% and a $125,000 second @ 7.00% and you want to refinance at today's 5.00% rates, well guess what you can not. That's right since your second exceeds $100,000 and was not part of your purchase, you can not take advantage of today's lower rates.This loan would work just fine if 1st & 2nd totaled $417,000 or less as they do not have that $100,000 limit on straight conforming guidelines. So if they raise the actual limit to $625,500 then this would be a doable deal.
Let's hope this passes sooner than later as I feel it will be a small boost to our business and help us reach a botton in the real estate market.
Please let me know what you think!