Important Update-  New Conforming Loan Limits Pending – Big Impact on California Housing Expected

Part of our commitment to our clients is to keep them informed of changing conditions and information regarding real estate trends and developments.

Congress could be passing legislation that will actually help you.  And that legislation could come into effect soon.  An article written a couple of days ago suggests that the debate right now is whether a high cost area (California) bump of 150% would be temporary for 1 year, 2 years, or whether it would be permanent.  That seems like they are no longer questioning whether or not to increase the $625,500 conforming limit in California, but for how long.  The final decision will probably not come down until March. 

Who could benefit the most?   Anyone who owes between $417,000 and $625,500, and those looking to purchase properties in California.  What you will see is the housing market heat up, the stock market improve, and home owners with Jumbo Loans (those over the conforming limit) refinancing at lower conforming rates.   This could save you between .500%  to .750% on your interest rate. 

This could definitely cause a log jam for the mortgage industry, especially since a lot of lenders are running lean.  Here’s our suggestion.  BE PREPARED and PLAN AHEAD!!!  Turn times from application to close could be somewhere between 30 and 45 days.

Raising the conforming loan limit up to $729,750 will have the following positive impacts on our local real estate markets:
 

• First Time Home Buyer Programs available with just 5% down to purchase prices up to $768,000.
• Move up buyers can obtain the lowest rates to buy a new home up to $912,000 with only 20% down.
• Using a conforming 1st mortgage and a 2nd mortgage, one can buy a home with as little as 10% down with no mortgage insurance for purchase prices over $1,000,000.
• Homeowners with mortgages today between $417,000 and $729,750 will have access to conforming refinance rates which are currently 0.5% to 1.25% better than corresponding jumbo rates.  This will improve homeowners’ financial positions by creating more disposable income which helps the economy in general.
• Investors will probably seize this opportunity to combine lower rates, lower home prices, and higher rents to buy properties…thus helping to reduce inventory.

Now is the time for move-up buyers to get their homes on the market to take advantage of this significant change of events coming.