If you own a home or are planning on buying a home in most areas of Califorinia using a “Fannie Mae Jumbo” loan, you should seek to complete your transaction prior to September 30th. After that date temporary “conforming” and FHA insurable loan limits will be dropping, which may affect your purchase financing.

The new “conforming jumbo” loan amount will drop from $697,500 to $546,250. This will also be the revised FHA loan amount.

The government implemented temporary loan limits back in 2008 as one way to support the home lending market, as most high-balance lenders disappeared from the lending scene for a period of time due to the financial crisis.

There is an outside chance that a deal will occur in Congress to extend the higher loan limits, but it is unlikelygiven the current focus on deficit issues. In any event true “jumbo loans”, loans that are not backed by Fannie Mae or Freddie Mac, carry an interest rate about .50% higher than the “conforming jumbo” Fannie Mae rate in today’s mortgage marketplace. Back in 2008, at the height of the financial crisis, the spread was almost 2%.

Filed under: Uncategorized by admin