New Change in Conforming Loan Limits Could Mean More Bang for Your Buck
by Kimberly Bordonaro

As interest rates and home prices continue to rise, Fannie Mae, the nation’s principal source of financing for home mortgages, may be coming to the relief with a new conforming loan limit increase as high as $400,000.
Currently, the limit is set at $359,650 for a single-family mortgage. Loans above this limit are considered “jumbo loans” and hold a higher interest rate, usually 25 to 50 basis points higher than a conforming loan.

The new limit, which Fannie Mae typically announces in late November, is great news California residents looking to purchase or refinance their homes.

“A $400,000 loan is really going to be more than sufficient to meet borrowing needs in most areas of the country,” says Mike Frantantoni, economist with the Mortgage Bankers Association, “but in California, a $500,000 home is not out of the norm. A $400,000 loan is needed to get 80 percent loan-to-value ratio there.”

Aside from the benefits for new homebuyers, the new increase is a great tool for mortgage holders who currently have a ‘jumbo loan’ that will now fall into the new loan limits. By refinancing your mortgage into a conforming loan, you could be saving a substantial amount of money each month.

This is especially true if you are holding a Home Equity Line of Credit (HELOC). The Feds have continued with their rate-hike campaign, bringing the prime rate to 6.75%. By refinancing your HELOC into a new conforming loan limit, you could save money and still have a low, fixed-rate mortgage.

The conforming loan limit will not take effect until 2006; however, some lenders have already started to change their lending limits as a means to stay competitive in a rising interest rate market. This is proving to be a great advantage to homeowners who require financing today.
Want to take advantage of the new conforming loan limits? Wind Star Mortgage Inc. has access to a number of lenders who are already using the new limits in their guidelines!

For more information and/or a complimentary consultation, call:
Kimberly Bordonaro, Loan Consultant
(818) 865-0600, ext. 106
Email: Kimberly@pclending.com