Higher Conforming Loan Limits in the Works!

It was promising news last week with President Bush signing the new economic package. A feature of the package includes raising the conforming loan limits to $729,750 which would more accurately reflect the cost of housing in California. Currently, conforming loans are at $417,000 which doesn't benefit many Bay Area buyers when our median home prices range from the high $700's to low $800's.

Therefore, most buyers are forced into more expensive non-conforming jumbo loans, decreasing homeownership opportunities for many. Jumbo loans carry ~1% higher interest rate then conforming loans. The new limits will also provide some home owners new opportunities to get into a lower interest rate loan, thereby lowering their monthly payments.

It may not be until late spring when Freddie Mac & Fannie Mae have their systems in place to start processing applications under the new loan limits. Meanwhile, there are buying opportunities out there depending on price point and location. There are also some lenders who are charging no pre-payment penalties or fees to refinance into a new conforming loan if a buyer is currently in the process of making a purchase. Feel free to contact me if you'd like a referral to a loan consultant.