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Possible loan limit increases

By
Real Estate Agent with RE/MAX Hometown

FYI

 

The economic stimulus plan worked out last week in Washington, should provide nearly a year of cheaper loans for Californians buying or refinancing higher-cost homes. 
 
Leaders of the House of Representatives and the White House agreed that the size of loans that can be purchased by government-sponsored mortgage buyers Fannie Mae and Freddie Mac should be increased sharply for a year from the current cutoff of $417,000. 
 
The plan also would more than double the size of loans insurable by the Federal Housing Administration, from $362,790 to $729,750.** 
 
The precise increase on the "conforming" ceiling was still being debated late Thursday. House Republicans said they had agreed to temporarily raise loan limits for Fannie Mae and Freddie Mac to $625,500 while Democrats said the deal would boost limits to $729,750. 
 
Either way, the increased limit on loans eligible to be bought by Fannie Mae and Freddie Mac would be temporary, expiring Dec. 31, 2008. It was not clear if the higher FHA limit would be temporary or permanent. 
 
The FHA increase would allow thousands of Californians to buy or refinance their homes with much lower, more secure, fixed rate mortgages. By utilizing FHA, the buyer will not have to adhere to the stringent underwriting guidelines that have made Conforming and Jumbo loan programs difficult to qualify for. Higher loan to values, lower minimum credit scores, and flexible underwriting will make buying, selling, and financing a home in California much easier. Here are just some of the features of an FHA loan: 
 
97% LTV on Purchases 
Down Payment Assistance of up to 6% 
95% LTV on cash out refinancing 
No minimum credit scores 
Liberal credit guidelines 
No prepayment penalties 
SFR, Condo's, Town Homes, and Manufactured 
Seller contributions of up to 6% 
Non-occupying cosigners 
Higher income to debt ratios 
Loans are assumable 
 
Let's not forget the "5% DECLINING MARKET" hit that has affected 
nearly every Conventional loan program above 75%. FHA still allows 
97% LTV's on purchase transactions and up to 105% when using 
some Down Payment Assistance Programs. 
 
And FHA does not have a "credit risk adjustment" based upon credit 
score such as the one recently implemented on Conventional loan's.** 
 

Show All Comments Sort:
John Walters
Frank Rubi Real Estate - Slidell, LA
Licensed in Louisiana
That's nice.  I think they need to raise the ratio of income needed for loans so people can pay them back.
Feb 05, 2008 09:21 AM
William J. Archambault, Jr.
The Real Estate Investment Institute - Houston, TX

Great loan, for $750,000.00 starter homes!

Bill

Feb 05, 2008 09:45 AM
Hope Hughes, CRS, ASR, ABR
Metrolist, Inc. - Highlands Ranch, CO
Good info - thanks for the post!
Feb 05, 2008 09:47 AM
Konnie Mac McCarthy
MacNificent Properties, LLC - Cobb Island, MD
Broker/Owner - VA & MD "Time To Get A Move On!"

bring it on....I'm ready for more positive news....I'll take all I can get.

Feb 05, 2008 12:04 PM
Richard Ives
Chicago, IL
Great post, Mark.
Feb 10, 2008 05:38 AM