1) The new loan limits go into effect on CONVENTIONAL mortgage loans originated beginning on July 1, 2007 and ending on December 31, 2008
2) Conventional Loans can be made to the HIGHER of the current conventional loan limit ($417,000) or 125% of the area median home price as determined by HUD Secretary. So unless the area median home price in your area is greater than $333,600 you will see no increase to the conventional loan limits.
3) FHA loan limits are available for loans "for which the mortgagee (lender) has issued credit approval for the borrower on or before December 31, 2008. So it appears the FHA limit changes go into effect immediately upon enactment of the legislation.
4) FHA loans for 1-unit, Single-Family Homes, can be made up to the LESSER of 125% of the area median home price OR 175% of the dollar amount limit for HUD loans for 2008. So again, this will mainly impact only those areas with a high median home price
5) FHA loans, however, WILL be eligible to a loan amount not LESS than 65% of the conventional loan limit for 2008 which is $417,000. So 65% would be an FHA loan limit of $271,050.
6) The HUD secretary will publish a list of area median home prices and mortgage principal loan limits NO LATER than 30 days from the enactment of the stimulus package legislation
7) The HUD secretary maintains the authority to make future changes to the loan limit nationally or in targeted markets as he determines is necessary.
For a full transcript of the HR 5140 you can click HERE
©2007 Ken Stampe
Ken Stampe is a Mortgage Loan Originator, Mortgage Author and Mortgage Loan Officer Instructor living in Dallas, TX. Ken provided his first client a mortgage loan in 1996 and writes about home buying and mortgages to help clients make smart home mortgage loan decisions. Contact by email Ken@MortgageLoanDallas.com
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