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 ‘National Association Of Realtors’
Refinancing With Higher Conforming Loan Limits
May 30th, 2010Fixed Rate Second Mortgages For Refinancing ARM Loans
December 13th, 2009
According to the National Association of Realtors, home depreciation is affecting homeowners across the nation. As a result, many consumers are nervous that home values may begin to drop before they refinance their adjustable rate mortgage. Millions of homeowners have mortgage loans that are scheduled to recast which will cause interest rates to rise. Borrowers will have rising monthly payments as a result.
The good news for people who are considering refinancing your ARM is that the current market is yielding low rates with affordable payments blessed with interest only monthly payment options. The fixed rate second mortgages are a whole percentage point lower than the prime rate for home equity lines of credit that are reported in the Wall Street Journal.
The bottom line you need to focus on is whether or not the home equity loan offers you monthly savings by consolidating your debt. If you have the ability to lock into a fixed rate mortgage and save a few hundred dollars a month, then it is time to call your loan officer. Ask your loan representative if you can eliminate your revolving credit cards at the same time you refinance your ARM.
How much money would you save by refinancing into fixed rate loan?
As many of borrowers already know, consumer debt is at an all-time high, and if you have credit card bills mounting each month it may be time to consider a 125% second mortgage. This 2nd mortgage requires zero equity, and the loan balances can even exceed the value of your home. FHA mortgages will allow you to subordinate your existing 2nd mortgage if you do not have enough equity to refinance both loans into one mortgage.
- Second Mortgage Loans to 125%
- Home improvement financing
- Debt consolidation for lower Payments
Fixed rate second mortgage loans can convert adjustable rate rate credit card debt into a simple interest installment loan that yields significant monthly savings and additional tax deductibility as well. Homeowners benefit from reduced their numerous credit cards balances when the compounded interest debts convert to simple interest savings. People are saving thousands of dollars each year, when they consolidate their variable interest loans into a fixed rate 2nd mortgage or FHA home loan.
By: Lynda Nelms
Refinance Home Loan Mortgage Rates Fall Sharply
November 15th, 2009
The mortgage industry has experienced slow application activity over the past several months, but that jogging pace may turn into a sprint as mortgage rates fell to historical lows recently. On November 25, the government announced some major credit stimulation initiatives in a bold move to bolster the depressed housing and mortgage markets. On the news, home loan rates tumbled by one-half percent, a move seldom encountered in the mortgage business. Three major components came together to create the sharp drop. First, the Treasury announced that they would now guarantee Fannie Mae and Freddie Mac debt and purchase up to $100 billion of that debt, thereby bolstering investor attraction to the safety of their issued bonds. Secondly, the Treasury announced that it would purchase up to $500 Billion of Fannie, Freddie, and Ginnie securities, creating much needed liquidity in the mortgage markets. Finally, Treasury yields dropped in a major one-day move, almost one-quarter percent on the 10-Year Treasury bond.
The result of this perfect storm of financial news was a one-half percentage point drop in mortgage rates and a potential beginning for stabilization in housing. Historically low mortgage rates may be just the stimulus needed to drive potential homebuyers off the fence to begin the offering process. After the government announcement, many lenders were offering par rates in the 5.5 percent range for 30-year fixed rate mortgages. Home loans at this price may be a hard deal to pass up for those refinancing loans and purchasing homes, especially in light of the roller coaster ride that mortgage rates have taken so far this year.
On the refinancing front, although interest rates are low, home prices continue to deteriorate across the country. The National Association of Realtors recently announced that sales of existing homes fell by 3.1 percent in October, and the median home sales price plunged 11.3 percent from a year ago to $183,000. On this news, it’s important to keep in mind that a homeowner’s qualified refinance home loan interest rate may not be as low as advertised offer rates, if their loan-to-value (LTV) ratio exceeds 80 percent. So, it’s a good idea for those considering a mortgage refinance to get a handle on the value of their home, before they start shopping rates. The spread appears to be tightening for higher LTV home loan scenarios, but those refinancing over 90 percent of their home’s value will most likely get the best deal with an FHA refinance.
As for the rate outlook ahead, many feel that the current low mortgage rates will continue for a while. Whether they decline even further is anyone’s guess, but a leveling in home prices could be just the medicine needed for further rate dips.
By: Jim Bisnett