What happened to new jumbo loan limit?

<em>"So much for 28% DTI IR..."</em>





Do you think this is the end of the credit tightening cycle? Last year they allowed 55% DTI, so a 45% DTI in the guidelines is a significant tightening, and it will tighten further...
 
<< On a primary residence, existing subordinate liens must be resubordinated. The new loan cannot "cash out" an existing subordinate lien. >>



I'd have to see the guidelines on this provision. It doesn't seem plausible that Fannie/Freddie won't rate-and-term refinance an existing jumbo loan combo into a new conforming jumbo.
 
<p>"Do you think this is the end of the credit tightening cycle? Last year they allowed 55% DTI, so a 45% DTI in the guidelines is a significant tightening, and it will tighten further... "</p>

<p>Nah, I don't think its the end. Just disappointed the government is still willing to pony up so the stretched buyers can still get property. I was hoping they'd cap that at 40% to squeeze the buyer pool further. With 45% DTI and 90% LTV people who shouldn't be buying a house will still be able to do so and do it on agency paper...</p>
 
<p>ipo,</p>

<p>This is designed to accept the biggest group possible so as to provide as much relief as possible. It has nothing to do with responsibility, common sense, or even rationality. The only limits being imposed are what they think the market will bear an what they think will stave off total implosion.</p>
 
The credit tightening process has to proceed as a measured pace or else the entire credit market with seize up. It practically has already. The frustration most people will experience at the bottom is that prices are low, but nobody can get credit to buy. It is one of the reasons cash is king during a credit crunch.
 
<p>I need to pull some more cash out of my house then!</p>

<p>If things continue as they are, with mortgage rates so pressured by problems in the credit market, I think I am just going to let my rate reset in July without a refi. As my ARM is based on the 1-year CMT, if it resets today it will only be 4.5%. After the Fed drops again in March, that'll probably be 4%. If I were to refi into a 3/1 ARM today, I'd have to pay 5.25-5.50... Heck, even my HELOC is at 5.45 now and headed below 5% as the prime rate continues down.</p>

<p>With real recession here, I don't think the Fed can start any kind of tightening cycle until 2009...</p>
 
<p>I'm skeptical that the FFR remains low for long. I think at some point Ben has to admit that it's having little effect on the credit crunch and just say "screw it, inflation is killing us" and jack the rate back up as fast as it came down.</p>

<p>At least, that's what I would do. </p>
 
<p>45% DTI. </p>

<p>Is this all monthly debt or the mortgage payment only over the gross monthly income?</p>

<p>Also when lenders are calculating this, do they sum up all house related expenses (tax, hoa, insurance, principal and interest) or just the princiapl and interest (tax break washes the tax and hoa usually)? Thank you.</p>
 
I've bookmarked this thread, ipo. I'll donate $100 to your favorite charity if the Fed doesn't raise rates before the election in November.
 
<p>Better yet Nude, where do you think the discount rate will be in November? I'll take the over/under on that $100 to a charity... They are at 3.5 today</p>
 
<p>Anon</p>

<p>Sales price was $980K. </p>

<p>Buyer owns his current outright and will keep it as well as a large commercial building. It was his own bank that he had a business relationship with.</p>

<p>Regards</p>
 
I can't take that bet, ipo. If you had asked me 8 months ago if I thought we'd be @ 3.5 right now I would have laughed. But I will bet they raise before the election.
 
Ipop - The following is not giving you a hard time, but is written from true concern<p>

I would guess the Fed will continue to lower the fed funds rate, and continue to increase the TAF, and lower the discount window rate, and do anything else they can to stimulate lending and borrowing, but I would not necessarily translate that into lower mortgage rates or any other free market interest rate.
 
<p>I understand awgee and appreciate the reminder... I'll probably end up refinancing. It would be smarter to at least lock up for 3 years and I'll probably do it. Probably not worth trying to save a point of interest each month for the risk involved. </p>

<p>I was patiently waiting for 3/1 to get to 4.5% but the de-leveraging has pushed rates on the 3-year up to 5.5% now. I could have had 4.625% on many occassions with zero points and didn't pull the trigger. Argh!</p>
 
Not only are people not going to be motivated to pay down principal, my house needs some fixing up, and I am not motivated to hound the hub to start doing it. If others are like me, I would guess that will multipy to a lot less consumer spending.
 
I hear you, lawyerliz. I, too, would like to make several improvements, but I'm not willing to spend anything at this time.



It's true that the new Jumbo Lite loans allow for no consolidation of mortgage indebtedness < 729750. "Economic stimulus" indeed! Huh.
 
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