Financial Fitness

There are a few changes coming in the loan industry that you should be aware of if you're thinking of buying a home or refinancing in the next few months.

First, a little background.

A "conforming" loan is a loan that conforms to the guidelines for Fannie Mae and Freddie Mac.  Loans can conform in two categories of size -- regular or jumbo.  The limit for a regular conforming loan is $417,000, but for jumbo conforming loans it is currently $729,750 in "high balance areas" (this would include places like Los Angeles County with high housing costs). 

Over that limit you have to go with a plain old "jumbo" loan, which means paying more interest and meeting tougher qualifications.

The problem is that the current limit is actually an exception to the rule that was created a few years back.

And it's going to expire in September, causing Jumbo Conforming loans to max out at $625,500.

What that means for you, if you have a loan amount between $625,500 and $729,750, is that you should jump before September if you want to get a better rate and easier qualification!  Waiting will probably cost you around .75% on the rate and a lot of headaches in paperwork.

If you're interested in a refinance or purchase and would like to know more about this issue please feel free to contact me!