In just a few short months the temporary loan limits in high-cost areas, that were established during the height of the financial crisis, will disappear.

As of October 1st of 2011 these so-called “Jumbo Conforming” loans will go away (barring a last minute reprieve and we have heard no such discussion to date). This means that conventional home loan amounts between $417,000 and $697,500 will most likely carry a higher interest rate since private “jumbo” lenders will need to fill the void as these Fannie Mae (and Freddie Mac) loans go away.

In February of 2008 the Economic Stimulus Act temporarily raised the “conforming” and Federal Housing Administration (FHA) loan limits in San Diego County to $697,500 from $417,000. This established a two tiered system with “conforming” loan amounts topping out at $417,000 and “jumbo conforming” loans topping out at $697,500. In February of 2009 these loan amounts were extended by Congressional action.

If you or someone that you know has a loan amount between $417,000 and $697,500 it might be prudent to finalize a home purchase or refinance now, rather than waiting until after October 1st, as there is a real possiblility that loan amounts within this range will carry a higher interest rate after October 1st.

Filed under: Uncategorized by admin