Temporary Increase in Conforming Loan Limits- How will this affect your purchase in our Midtown Direct Train Line towns.....
Hi Everyone,
Hold onto your hats! I'm getting flooded with emails from mortgage companies with this great news. See below.
Temporary Increase in Conforming Loan Limits
The stimulus package will provide for a temporary increase for the GSEs conforming loan limits to match the new levels established for the FHA. Currently Fannie Mae and Freddie Mac are only able to purchase loans under $417,000. Loans with balances above that limit have fewer buyers and are significantly more expensive and difficult to finance.
Even when financial institutions are willing to make these loans, because there is no secondary market for them, they cannot sell the loans and fund new ones. By permitting the GSEs to buy these loans, this change would provide vital liquidity to mortgage markets where funds are currently unavailable or limited.
************
The President has not yet signed the bill, but that seems likely from everything we’re hearing. The loan limits are being increased to 125% of the area’s median home price (but not to exceed $729,750). Restrictions, regional limits and actual implementation has yet to be resolved.
How does this affect buyers for Maplewood, South Orange, Millburn, Short Hills, Summit, Chatham, Madison, Livingston, Montclair and surrounding New Jersey towns????
Assuming Excellent Credit and 80 LTV the spread on a 30 year fixed conforming to non conforming can range from .625% to a 1.00%. difference. The spread is less on the ARM’s. a 10/1 conforming to non conforming . The range is a .375% - .500% difference.
Rates are fantastic right now.
Most JUMBO ARMS are priced in the low to mid 5%
A rate that exists one day may be different the next.
Mortgage Rates vs. Federal Reserve Cuts
When the Fed cuts the discount rate or fed funds rates these are vehicles banks use for overnight lending. In general banks follow suit to also lower the Prime Rate (currently 6%).
Mortgage rates tend to follow the 10yr Treasury Bond, not fed funds or discount rate or prime.
The lower the bond yield the lower mortgage rates.
PRE rate cuts the bond was 4.33. NOW it is 3.65%.
Mortgage markets price in a fed move in advance.
Current bond environment is highly volatile intra day---each earning report/bond auction/ etc can move the market
Conforming loan limit increase
1) FNMA and FHLMC will be allowed to buy loans worth as much as $729,750 for loans made between July 31, 2007 and Dec. 31, 2008. The FHA will also be allowed to insure loans up to $729,750 in high cost markets.
2) Details on restrictions, regional limits, and the actual implementation have yet to be resolved and the President needs to SIGN the bill! (729k is the MAX based on 125% of median sales price in area)
3) I will alert you when the bill is signed in to law and when all details and pricing are available.
Yours to count on,
Sue Adler
www.SueAdler.com
Hold onto your hats! I'm getting flooded with emails from mortgage companies with this great news. See below.
Temporary Increase in Conforming Loan Limits
The stimulus package will provide for a temporary increase for the GSEs conforming loan limits to match the new levels established for the FHA. Currently Fannie Mae and Freddie Mac are only able to purchase loans under $417,000. Loans with balances above that limit have fewer buyers and are significantly more expensive and difficult to finance.
Even when financial institutions are willing to make these loans, because there is no secondary market for them, they cannot sell the loans and fund new ones. By permitting the GSEs to buy these loans, this change would provide vital liquidity to mortgage markets where funds are currently unavailable or limited.
************
The President has not yet signed the bill, but that seems likely from everything we’re hearing. The loan limits are being increased to 125% of the area’s median home price (but not to exceed $729,750). Restrictions, regional limits and actual implementation has yet to be resolved.
How does this affect buyers for Maplewood, South Orange, Millburn, Short Hills, Summit, Chatham, Madison, Livingston, Montclair and surrounding New Jersey towns????
Assuming Excellent Credit and 80 LTV the spread on a 30 year fixed conforming to non conforming can range from .625% to a 1.00%. difference. The spread is less on the ARM’s. a 10/1 conforming to non conforming . The range is a .375% - .500% difference.
Rates are fantastic right now.
Most JUMBO ARMS are priced in the low to mid 5%
A rate that exists one day may be different the next.
Mortgage Rates vs. Federal Reserve Cuts
When the Fed cuts the discount rate or fed funds rates these are vehicles banks use for overnight lending. In general banks follow suit to also lower the Prime Rate (currently 6%).
Mortgage rates tend to follow the 10yr Treasury Bond, not fed funds or discount rate or prime.
The lower the bond yield the lower mortgage rates.
PRE rate cuts the bond was 4.33. NOW it is 3.65%.
Mortgage markets price in a fed move in advance.
Current bond environment is highly volatile intra day---each earning report/bond auction/ etc can move the market
Conforming loan limit increase
1) FNMA and FHLMC will be allowed to buy loans worth as much as $729,750 for loans made between July 31, 2007 and Dec. 31, 2008. The FHA will also be allowed to insure loans up to $729,750 in high cost markets.
2) Details on restrictions, regional limits, and the actual implementation have yet to be resolved and the President needs to SIGN the bill! (729k is the MAX based on 125% of median sales price in area)
3) I will alert you when the bill is signed in to law and when all details and pricing are available.
Yours to count on,
Sue Adler
www.SueAdler.com
Labels: conforming loan limit increase, Livingston, Maplewood, midtown direct trainline towns, Millburn, Short Hills, South Orange New Jersey, Sue Adler, Summit
posted by Sue Adler, Keller Williams Realty at Friday, February 08, 2008
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