Jumbo home loans start at $417,100 and above. A new bill could be push conforming loan limits up to $729,750 and make jumbo mortgage loans anything above $729,750. This will be a major move to offset the housing price and sales decline. As a result, this will be an increase the mortgage loan limits for Fannie Mae, Freddie Mac and the Federal Housing Administration (FHA). The critical role that Fannie Mae and Freddie Mac (GSEs) play in providing liquidity to the mortgage market has never been more evident than it is today. The national sub-prime meltdown has had a dramatic impact on both the cost and availability of mortgages in many markets. Since August 2007, the interest rates for jumbo borrowers have been more than 1 percentage point higher than conforming loans, which can cost homeowners up to $400 month in higher interest payments.
Raising the GSEs’ conforming loan limit will provide immediate relief to borrowers and alleviate downward pressure on our already fragile housing markets. According to the National Association of Realtors®, increasing the GSE loan limit will result in more than 300,000 additional home sales and strengthen current home prices by 2 to 3 percent.
I also believe that increasing the FHA loan limits is critical to helping bolster our fragile housing market. Current law restricts FHA loans to levels well below the median home price in many areas of the country and caps loans in high costs states at $363,790. These limits are preventing many homebuyers from using FHA to purchase or refinance their loan. The proposed provision will increase FHA loan limits nationwide by raising the floor to $271,050 and the limit to 125% of local median home prices. These increases will help an additional 138,000 Americans purchase and 200,000 families refinance their homes safely and affordably.
Would you rather pay jumbo mortgage rates or conforming rates? It’s a no-brainer answer if you ask me. If the bill gets passed, and it should, you can expect many homeowners who fit into the jumbo mortgage area to refinance and buyers who were on the sidelines to find better mortgage programs and with lower rates for purchases. Homeowners will also feel some relief as home values start stabilizing with the increased sales activity. In addition, world financial markets could calm down, as well as the employment data. It sounds like a win-win situation for everyone; bargain purchase prices for buyers who were on the fence and refinances with lower mortgage rates for homeowners using conforming loan amounts and stabilizing prices.
By: Mario Olivera
Posts Tagged ‘Freddie Mac’
Refinancing With Higher Conforming Loan Limits
May 30th, 20102009 Obama Stimulus Plan For Mortgage Refinancing and Home Loan Modification
March 28th, 2010
Homeowners who are having a hard time paying their monthly mortgage payment, are facing “Financial Hardships”, are facing foreclosure, or want to save money every month should take advantage of President Obamas “Making Home Affordable” plan. This recently enacted plan allows homeowners to get 2% fixed rate home mortgages through refinancing or loan modification. Here is how you can take advantage:
To take advantage of President Obamas plan for yourself, you must meet these guidelines and eligibility requirements:
-Homeowners who are facing financial hardships, and can prove them with documents, can apply for, and most likely be approved for a home loan modification. This will be into a much more affordable monthly payment, depending on your financial hardships and how much those cost you.
-The home which is to be refinanced using this “Making Home Affordable” plan needs to be lived in as a primary residence by the actual homeowner. Homes used as investment, or second properties are not covered under this Government backed housing bailout program.
-With such a bad housing market and economy, homeowners can now refinance or get a home loan modification even if they owe as much as 105% of their homes actual market value. This will assist a lot of homeowners who have been making their payments, yet have seen their home values drop as a result of the tough economy.
-Home loans backed by either Freddie Mac or Fannie Mae are automatically eligible to be modified into a monthly payment which will not exceed 31% of the homeowners gross monthly income. This will help a lot of people who currently spend 50% or more of their income towards their mortgage payments.
This is a great way for millions of homeowners across the country to get back on track with their finances, save money every month, or most importantly save their home from foreclosure. Refinancing and loan modification are now easier and more beneficial for a homeowner than they have ever been before. If you need to save money to save your home, or pay off other mounting debts, use this plan now and start seeing the huge savings every month. You at least should look into the potential savings that you may be able to get by talking to a mortgage lender or bank. Do yourself a favor and act now before it is too late and you lose your home, or this program is gone.
By: Michael Petrone
Government Aid For Refinancing Home Loans
January 22nd, 2010
Today is a special day for many people, the Government and banking institutions can’t make up their minds and the markets are out of control!
But, many people in debt and other financial stress face the various serious business of foreclosure on their homes. To prevent that from happening many will turn to refinancing home loans to bail them out of a bad situation.
One major problem is that there are many companies offering refinancing home loans, trying to cash in on the ever increasing refinancing home loans market, but not all these refinancing home loans actually benefit the emotionally and financially distressed homeowner who is on the brink of losing everything.
At this point in time, the financial lenders have dictated the terms of the refinancing home loans and homeowners, especially with limited resources and poor credit standings pretty much had to accept the terms regardless of how costly those terms would be.
Unfortunately, many homeowners are dealing with higher adjustable rates on their mortgages, but the value of their homes is not increasing. Often time since it is becoming increasingly difficult to sell homes in this market, the equity on the homes is decreasing. This makes refinancing home loans even more difficult resulting in heavy financial setbacks from having to use personal money to help refinance.
The US government will be intervening to help prevent the foreclosure epidemic from totally crippling the economy. The government intends on pouring an additional 300 billion dollars into new mortgages. This way the private financial institutions can offer loans to even the most financially devastated homeowners in an effort to save their property from foreclosure.
A good government selling point is that the American taxpayer will not pick up this new funding burden for refinancing home loans. It will be the government sponsored Fannie Mae and Freddie Mac insurance programs that will pick up the refinancing home loans on mortgages that are in jeopardy. The Fannie Mae and Freddie Mac government chartered organizations will buy the mortgages directly from the financial lenders.
There are drawbacks for private lenders. They will be obliged to refinance loans at less than the value of the home itself. This measure means that banks and other lending institutions will sustain losses from this intervention. While homeowners benefiting from the issuance of these new refinancing home loans would be required to share their profits with the government upon the sale of the property.
The government will also benefit from this funding by collecting fees from financial lenders and from the homeowners as well.
There will be a new agency that will coordinate the Fannie Mae and Freddie Mac programs with the participating financial institutions.
It is expected that close to 500, 000 homeowners could benefit from the new refinancing home loans.
After the initial year of operation this new bill will establish a program to generate affordable housing.
This new government bill has been hailed by some of the economic experts as a good jolt to the sluggish economy and a lifesaver to the homeowners who really need it.
Thanks for reading,
By: Denis Darling