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Jumbo Conforming Loans, what's it mean to you?

Mortgage and Lending

Jumbo Conforming Loans, what's it mean to you?

It's here...drum roll please. New higher loan limits from FHA and Fannie Mae, but what's it really mean?

We haven't yet gotten all the details for FHA, but here's the details that Fannie Mae released today (some of them I think are important for you to know).

You can now get a conforming loan of up to $729,750 (in most areas). They are calling these, Jumbo-Conforming if the loan is over $417K up to the maximum limit.

For this range of loan, there are certain restrictions put in place that I feel defeat the whole purpose of the increase.

For refinance transactions:
1. Cannot consolidate a first and second, can only refinance the first.
This is insane. Most folks in trouble because of large debt and rising interest rates have a first and second. Most, if not all lenders currently carrying second mortgage WILL NOT re subordinate the second lien, so no luck with this change helping these folks.

2. No Cash Out. Can only be used for rate and term refinancing. Most folks needing help have run up credit cards to offset debt so the cash can pay the mortgage. Sorry, can't consolidate debt on this program.

3. Maximum loan to value: 75%. 95% max combined if you can get your existing second mortgage to stay in place (like that's likely to happen...sarcastic here). 75% max loan to value. This will help those with homes valued over $556K to about $950K.

4. Maximum debt ratio's of 45% and no income documentation waivers. The folks in trouble can prove income, most I see are well into the high 50%'s on debt ratios.

The purchase side of this plan is tight, but a little more liberal, allowing 90% loan to value.

In either case, if you have a higher loan amount, take the time to see if this can help you. For those that do fit the mold, it will significantly help!

Take the rise in loan amounts with a grain of salt. I was believing this package would stimulate the mortgage market and real estate market, now I'm having second thoughts!

Anyway you see it, you gotta still tune into Straight Talk Real Estate! Sunday's, same place, KRLA AM-870 on the radio dial!