Increase in Conforming Loan Limits for 2009
Mortgage Credit Problems Columnist
Current Conforming Loan Limits for 2009
The recently-passed American Recovery and Reinvestment Act of 2009. caused a dramatic change for homeowners around the nation concerning the current conforming loan limits. On January 1st 2009, the conforming loan limit reverted to $417,000 ($625,500 in designated "high cost" areas") after the temporary increase in 2008. But as of last week, the stimulus law reinstated the "high-cost" conforming loan limit of $729,750 once again.
For homeowners around the nation, this conforming loan limit largely depends on the median value of the area in which your property is located. In areas such as San Francisco and New York, many neighborhoods need that $729,750 limit to be eligible for conforming mortgages. Analysts speculate that this increase in conforming loan limits should remain in place until some sense of stability is reached in the purchasing and refinance mortgage sectors.
Why Are Conforming Loan Limits So Important?
Conforming loan limits are important because they determine which loans can be guaranteed by Fannie Mae and Freddie Mac--in this instance, the high-cost loan limit also applies to the Federal Housing Administration and their FHA loans. Since these loans are backed by the government or sold on the secondary market, mortgage lenders are more willing to issue loans to borrowers with this backing. For homeowners, this can often mean lower interest rates for their monthly mortgage payment and qualifying for certain loans which they may have not been able to get elsewhere.
Homeowners in California are a prime example as their average home price is often well above the traditional conforming limits. These loans were thus labeled "jumbo" loans and often came with tighter lending restrictions and significantly higher interest rates--a full percentage point or more. In addition, the selection of mortgage lenders is reduced and the chance of finding a home loan suffers significantly.
Find More Information About These Changes in Conforming Loan Limits
Whether you are considering the purchase of your first home or refinancing your existing mortgage, you should pay special attention to these conforming loan limits as they can affect your mortgage rate.
In addition to tips for dealing with credit issues, this site also stays up to date with mortgage information, breaking news, and general interest rates and terms and conditions. You can find more detailed information concerning these changes by reaching out to lenders directly to identify mortgage refinance or new home loan rates available to you.
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