April's housing statistics shows that Santa Clara County's average home price is $794,823. In many people's mind, this may not spell 'affordability'; however, with the historical low interest rates and prices, you can get value if entering the housing market has been on your mind. This is especially true as Santa Clara County's Conforming Loan Limit is scheduled to expire soon. This means it may negatively affect your purchasing power.
Conforming loan is a home mortgage loan that conforms to GSE (Government Sponsored Enterprise) guidelines such as Fannie Mae and Freddie Mac. The limit was $417,000. The Housing and Economic Recovery Act of 2008 raised the maximum conforming loan limit to $729,750. Initially, the raise was temporary; then few months later, in some high cost areas as Santa Clara County is, the limit has been raised permanently to $625,500.
Generally speaking, conforming loan will carry the lowest interest rate and fees. If the loan does not 'conform', then it becomes a 'jumbo loan' and those carries a higher interest rate and fees. This may affect your purchasing power greatly. For instance the difference with the interest rate may be quarter to half percent, depending on your credit profile and the lender you choose. That may translate into few hundred dollars a month for the entire duration of the loan mortgage.
Call me to discuss your real estate plans. Let's talk to see if it makes sense for you to buy in Santa Clara County before the loan limits goes up.
Comments(0)