We’ve received a lot of emails regarding both the amount of the conforming loan limit increase ($729,750 max), and the time this increase will be effective (July 31st 2007 to Dec 31st of 2008). So if you’re confused, you’re not alone.
Kelly McCray provides the following:
“The information coming out on this issue is confusing right now. The bill itself is not written well and the industry is buzzing with conflicting interpretations.
1. The HUD median home price for San Francisco is 650,000, the new law sets the conforming limit for us at 125% of that, but not higher than 730K, (principal loan amount) so we will be able to go to the limits.
2. The time frame (and this is the confusing part) is that the GSE’s can buy loans that originated from July 2007 through December 2008. So, if we closed deals in the last 7 months that could benefit from this development, we could refinance them. What I don’t know is if I can refinance a previously jumbo loan into a conforming loan if I closed in January 2007, this doesn’t make sense.
3. There may be some hits for higher loan amounts, but this will have to be worked out and there aren’t any answers yet. Today, a conforming loan of $417K, 30 year fixed is 5.5, if they hit us with a .5 adjustment for loan amount then that makes the rate 6%, this is almost a full point lower than the current jumbos.
4. There is no answer as to how long this will take to implement and get out to the lenders, I can’t even guess.
If buyers are hesitant about the deals they are making now, if they close thinking they can refinance when this gets sorted out, the requirement for holding title on a refinance is at least six months, they would have to wait until August counting forward from March.”
–this just in: Conforming Loan Limit approved by Senate [theFrontSteps]