Conforming loan limits expire in less than 30 days!by Tim Manni
As of October 1, 2011, conforming loan limits in designated “high-cost” areas of the country–like Washington, D.C. and San Francisco–are about to drop to $625,500.
What does this mean?
It means that in the blink of an eye, you may go from a conforming loan to a jumbo loan.
And as loan officer and HSH.com contributing writer Dan Green explains:
“It’s not even an Oct0ber 1 deadline–many lenders are already enforcing the new limits. Some stopped August 1, others stopped August 15.”
Since 2006, the typical conforming loan limits have been unchanged in the Continental U.S. The conforming loan limit for a one-unit home is $417,000. In some parts of the country, though, conforming loan limits are higher, currently ranging from $417,000 to $729,750.
Home loans that are too large for these limits are known as “jumbo” mortgages. Jumbo mortgages tend to carry higher mortgage rates and pricier fees compared to conforming loans.
Time is running out if you live in a high-cost area
The changes to Fannie Mae and Freddie Mac’s charters does give homeowners in high-cost areas access to the same low, conforming mortgage rates as homeowners in less-expensive cities such as Cincinnati.
How do you determine whether you live in a high-cost area? Here are two ways:
If you live in a high-cost area, look out.
As of May 2011, a $925,000 home purchase needs a 21 percent down payment to keep it within conforming loan limits. After October 1, 2011, that figure will jump to 33 percent. It is an out-of-pocket cash difference of $104,250 to get access to the best mortgage rates in the market.
Dan Green contributed to this post.