Comments on: Confused about the conforming loan limit increase? You’re not alone.

By: jim kelly

jim kelly — Tue, 02 Dec 2008 09:20:46 +0000

It was his hometown team on Monday Night Football and the most important game of the season for the Buffalo Bills. Was there any doubt that strong safety Donte Whitner would play? Well, yes. Whitner is less than two weeks removed from a

By: Emily

Emily — Mon, 25 Feb 2008 18:46:42 +0000

Hi Kelly,

Thanks for the helpful article. I am still confused as to when this will go into effect (i.e., how soon can one look to refinance a jumbo into a conforming?). In the article itself it seemed as if we would have to wait until August, yet in one of your comments you mentioned looking for the new rates in March — can you please clarify that?

Also, I currently have an interest only loan of $650k at 5.25% with 4 years left before the rate becomes adjustable. Am I correct in understanding that these changes are a one-time offer only for 2008? I am not ready for the huge jump in mortgage payments that having a straight-up fixed rate 30 yr loan would entail, yet I feel like it would be incredibly stupid NOT to take advantage of this as down the line I will certainly be paying for it if I don’t. Is my thinking correct here? What would you recommend I do and how much do you think I could ultimately save? Do you think loans like 10 year interest only fixed rate loans (where after 10 years you keep the same rate but now pay principal AND interest) will be available and more affordable with the new conforming loan amounts?

And how high must one’s FICO score be in order to qualify for any of these new loans? I’ve heard that Lenders are really skittish and will only offer good loan rates to those with FICO scores above 700 — I’m very close to that, but not there just yet… Are these rumors true?

Thanks in advance for any advice you can offer!

By: james

james — Wed, 13 Feb 2008 17:06:39 +0000

that is really interesting and not surprising. have you heard about anyone going to jail yet? i had heard back in august that the fbi had 5 full time people assigned just to investigate some of the east bay mortgage brokers practices.

i’m sure the show will have quite a different aura about it this year.

By: Kelly

Kelly — Wed, 13 Feb 2008 15:36:27 +0000

James – it is going to be interesting to see how this plays out. Today is the CAMB tradeshow (california association of mortgage brokers) there should be a lot of talk going on about this issue. for years we have been trying to get the loan limits raised in California, one of our biggest opponents were the mortgage bankers – because they make a lot of money on jumbo loans, that until now were anything over 417K, and frankly there has been a lot of competition for the jumbo money. We will see how having the loans between 417K and 730K under fannie mae MBS’ effect the new jumbo loan rates.

By: james

james — Wed, 13 Feb 2008 07:34:07 +0000

thanks kelly. the delta in the old rate to stay conforming and the new one doesn’t seem like a big deal nor willl it matter much when you need a jumbo anyway. i was just looking for that clarification.

By: Kelly

Kelly — Tue, 12 Feb 2008 19:57:20 +0000

James – All the buzz and chatter is focused on loan amounts at $729,750 and below. Loan amounts that are over this amount are called jumbo loans, the rates on jumbo loans may come down a little, but for now it’s all a guess.

By: james

james — Tue, 12 Feb 2008 15:41:18 +0000

can either of you tell us what this really means in terms of regular folks like me?

lets say you had a 1.025 mil loan before and after the new limit. how much could you expect to save on a 30 year fixed at say 6 % ?

thx

By: AbsolutZeer0

AbsolutZeer0 — Tue, 12 Feb 2008 14:05:29 +0000

It has nothign to do with refinancing. The dates that are given refer to the agencies (fannie mae and freddie mac) being able to purchase loans that were created from that july date into the conforming loan product. This lets more paper be moved from banks and helps to decrease defaults because of lower rates. It effects the new deals because you are able to fit more houses and more products into conforming whether it be a refinance or purchase. So yes you can do basically any transaction using these new limits…

By: Kelly

Kelly — Tue, 12 Feb 2008 13:43:40 +0000

JK, I apologize if this was confusing. In the actual verbiage of the bill there is a date restriction, but it will not be applicable to people needing to refinance no matter when they closed their loan. So, yes, you can refinance your loan. We are expecting the new loan pricing to come about 30 days after the final passing of the legislation. Bush is expected to sign off tomorrow, so we’ll be anxiously anticpating the new rates in March. If you are thinkng you might want to take advantage of this it wouldn’t be a bad idea to contact your friendly neighborhood mortgage gal to get paperwork in order. For so many in the Bay Area this is going to be big relief.

By: jk

jk — Mon, 11 Feb 2008 23:06:35 +0000

Kelly,

Im still confused. Are you saying that since I bought an unit in 2006, I cannot refinance into the new loan program? I assumed everyone would be able to use the new loan limits as long as their property still appraised for the value of the loan.

So everyone who bought before July 2007is stuck with the jumbo loans?

Thanks for the help.