By M. Anthony Carr
Congress has spoken on the economic stimulus package and that means most of us are going to get a nice little check in the bank – complements of yourself (it’s your money anyway, right?) Included in the package is a section that will increase the loan limits for conforming home mortgages. Without getting all financialezey on you, it means that higher loan amounts will come with lower interest rates. That will help more people to purchase in high-priced areas like here.
Where the loan limit used to be $417,000 for the Washington, D.C. metro area, it looks like it will move upwards to $562,500. (They will go into effect March 14, 2008.) Any mortgage below this amount is called a “conforming” loan – it conforms to established guidelines so that the mortgage can be sold on the secondary market (usually on Wall Street). Loan amounts above the $562,500 will now be considered “jumbo” loans, which are subject to more stringent underwriting guidelines and potentially higher interest rates. By raising this limit, loan amounts that were previously jumbo now come under the more affordable guidelines, making it easier for buyers purchasing in high-cost areas such as Northern Virginia.
When you’re talking interest rates of under 6%, you’re talking a lot of savings for many, many buyers. The catch is (and there’s always a catch!) you must apply for the new mortgage BEFORE December 31, 2008.
So what? What does that mean to you? Three things:
1) if you’re considering a move up or refinance, you MUST have your application signed, sealed and submitted before the end of the year.
2) If you need to sell your house first, before taking advantage of these new features in the market, now is the time to fix it up and prepare for the selling process. And,
3) government-backed programs (FHA and VA) are also following these new loan limits.
BTW: MILITARY RESIDENTS: Are you or a colleague preparing for your next PCS? Weichert Financial can get you VA financing up to $700,000 for qualified buyers. Call me for help alleviate the stress of the pre-listing/pre-purchasing process.