Conforming Loan Limit to Rise
After the big news of the tax rebate, it is time to look at the other provisions in the economic stimulus plan presented by House leaders and the Bush Administration. One of those is a change in the conforming loan limit. The Seattle Times reports on this change to what is considered a conforming loan:
It would raise loan limits temporarily above $700,000 for the quasi-government entities Fannie Mae and Freddie Mac, which fund the bulk of the nation’s mortgages. Until now, these entities couldn’t buy and package mortgages larger than $417,000, the so-called conventional-loan limit.
While the Bush economic plan was announced Jan. 18 didn’t address the conforming loan limit, this new plan does. This is designed to make it possible to purchase homes, backed by the government, in higher-priced areas that include many major urban areas in the U.S., such as New York, Seattle, California and expensive locales like Hawaii.
It will probably help, providing the necessary funds to help borrowers achieve the lower interest rates that come with a conforming loan (as opposed to the rather rates associated with a “jumbo” loan). However, it is important that mortgage lenders carefully review the borrowers before giving out the loans. The home buyer still needs to be able to afford the home.
Tags: conforming loan limit, conforming loan limit rise, home mortgage loan, mortgage loan blog,
economic stimulus, Bush economic plan, tax rebate
January 28th, 2008 at 3:11 pm
[…] Nancy wrote an interesting post today onHere’s a quick excerptAfter the big news of the tax rebate, it is time to look at the other provisions in the economic stimulus plan presented by House leaders and the Bush Administration. One of those is a change in the conforming loan limit. … […]
January 28th, 2008 at 5:48 pm
[…] admin wrote an interesting post today onHere’s a quick excerptAfter the big news of the tax rebate, it is time to look at the other provisions in the economic stimulus plan presented by House leaders and the Bush Administration. One of those is a change in the conforming loan limit. … […]
February 11th, 2008 at 2:13 pm
Fannie and Freddie loans are not “government backed.” That’s a common misconception. The 2 are in fact government sponsored enterprises (GSEs) and they function as a clearing house for loans that meet their guidelines. They have the effect of commodotizing mortgage loans and making them more liquid investments, keeping costs down for borrowers.
February 12th, 2008 at 12:41 pm
The “government backed” was meant to refer to FHA loans, which also received a boost due to the rise of the conforming loan limit. I can see that I wasn’t nearly as clear as I should have been. Thank you for helping clarify the matter!