Increasing the jumbo mortgage limit

NEW -> Contingent Buyer Assistance Program
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BLUE FIRE_IHB

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How will this part of the new stimulus plan announced today impact the state of the 2008 housing market (or not)?





<p>"The deal includes a short-term increase to $625,500 from $417,000 in the size of mortgages that can be purchased and guaranteed by government-sponsored mortgage finance firms Fannie Mae (<a href="http://money.cnn.com/quote/quote.html?symb=FNM&source=story_quote_link">FNM</a>) and Freddie Mac. Those increased limits would expire on Dec. 31.</p>

<p>In addition, it would include a reform of the Federal Housing Administration.</p>

<p>The proposal would lower home-buyers' down-payment requirements when getting FHA loans, increase the cap on loans eligible to be FHA-insured and lower origination fees It is believed those changes could help lenders make loans to risky borrowers who have found it difficult to arrange for home financing since the collapse in the market for subprime mortgages last summer."</p>
 
I think that the actual rate passed by the House is a new and temporary "conforming" mortgage limit of $729,500. I'll be on the Thomas web-site tommorow to read the bill text to double check... but the 729,500 figure was released in the Speker of the House press release... see also the link to OCRMortgage blog.
 
it's 125% above the median home price in the area with a cap of 725k. it'll bring more business for mortgage companies since people with private equity loans can now refinance into one loan with a lower interest(assuming they meet the other requirements).
 
<p>I think it will help a few people on the margin, and do nothing but create an illusion that the gov-mint is doing something.</p>

<p>It will have no other effect.</p>
 
<p>I do not think that it will have much effect at all. People who would qualify for a GSE loan would have qualified without the GSE guaranty. Tell me which lending institution would not give a loan to someone with fully documented income, average debt, 10-20 percent down and 700+ credit. Of course, that is only like 1 percent of the population at this point.</p>
 
<p>Commuter, </p>

<p> You are such a cynic.... Unfortunately, I agree with ya. So many people, so bad cread, or WAY too much debt.</p>

<p>-bix</p>
 
<p>They would have to significantly raise the DTI limt on conforming loans for this to have any real impact. If a borrower wants a 700k loan they will need the Verified income to qualify. Of the people I know that "own" 800k homes none of them make 150-200k a year so I doubt they will qualify. Now if you could have a DTI of 130% they might.</p>

<p>IMVHO this is the government taking care of the upper class. Why should they pay more interest just to get a JUMBO loan. </p>

<p>What the government should do to stimulate the economy is require all employers double their employees salaries. That way we can REALLY afford more house.</p>

<p> </p>
 
This'll mean that upper middle class families such as mine will be able either A) spend $75K more on a house, or B) spend the same we would otherwise have spent borrowing $500K or so but save $500/month on our payment... I'll either buy sooner or buy more as a result.
 
ipoplaya will be able to afford more or pay less because the spread between conforming and jumbo was over a point. By eliminating this spread by turning jumbo into conforming, people who can qualify will pay less or get more.





This still does not make it a good time to buy. You want to buy when interest rates are high and prices are low and <em>refinance </em>when interest rates are low. You can't refinance into a lower price.
 
<p><a title="Permanent Link: O.C. mortgage shops are hiring!" rel="bookmark" href="http://mortgage.freedomblogging.com/2008/01/24/oc-mortgage-shops-are-hiring/">O.C. mortgage shops are hiring!</a></p>

<p>Two mortgage company presidents said they are hiring amid lower mortgage rates and a government plan to raise the conforming loan limit in high cost areas like Orange County to nearly $730,000.</p>

<p>http://mortgage.freedomblogging.com/2008/01/24/oc-mortgage-shops-are-hiring/</p>
 
Great more poo that Fannie and Freddie can hold on their books.



I really do not get why the Federal Govt can never take the high road and say unforunately people got over leveraged and over consumed, and as a result their is nothing we can do. The markets will fix themselves in time and then we can proceed forward. This is borderline socialist economy...something like the Chinese have but atleast they subsidize businesses and not homes.
 
<p>I just need to figure out the next big bailout.</p>

<p>Let me know where you will be coming to the rescue so I can become part of the group that doesn't have to deal with the consequences of my actions.</p>

<p>I can then spend the next few years enjoying something I can't afford and when the time comes to pay up, change the rules so responsible people pay for my ignorance.</p>

<p>What ticks me off is the end result is they are artificially propping up an asset that I want, with my tax money, so my cost later will be higer. Great thinking.</p>
 
<p>On a $700,000 loan, lowering the interest rate would save $583 per month in interest.</p>

<p>Personally I am thrilled about it. I have a $530K loan that is set to adjust in September 2009 at 5.375%. If I can get the conforming rate then I can re-finance into a 30 year at about the same rate....maybe even save a couple of dollars a month. It is a huge relief to me and will probably save me about $400 per month versus the rate I would have had to get on a 30 year. </p>
 
<p>"A point is not worth $75K or $500 month though. Maybe $8K upfront or about $50 a month right? Please check my math, I am a lawyer. "</p>

<p>IC - today, for example, I am only willing to borrow $500K on an interest-only loan at 6.75%. Annual interest payments would be $33K. Tomorrow, when conventional loan limits go up, the rate on that same loan program would be more like 5.75%. If I borrowed $575K at that lower rate, I would still have the same annual interest payments of $33K. Make sense? </p>
 
<p>"What ticks me off is the end result is they are artificially propping up an asset that I want, with my tax money, so my cost later will be higer. Great thinking."</p>

<p>My thoughts exactly. Just another way to screw the people that are not in houses yet. Another burden for the next generation.</p>

<p>As far as saving people money, I don't follow the logic. If you are competing with people with the same benefit for the same house, the house price goes up. Again, the system favors the incumbants.</p>

<p>Screw the government. What a joke.</p>
 
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