Here’s some general real estate news that, for once, will not affect the majority of homeowners who own of the majority of homes in the vast majority of U.S. housing markets: Starting October 1, 2011, new jumbo mortgage rules will go into effect, dropping the size of jumbo mortgages that qualify for purchase by mortgage leaders Fannie Mae and Freddie Mac from $729,750 down to $625,500. What’s more, new mortgage bankers such as TMS Funding and New Penn Financial LLC will be initiating new programs that will give lenders more money to cover these larger loans — up to $2 million in some cases, if the lenders have good credit and have the cash to stay current on their payments. Additionally, many jumbo mortgages will still be made, except already established mortgage bankers won’t sell them, instead keeping them stowed away in their portfolios.
So what’s the catch? These loans will cost more, plus costs will increase dramatically for those who want to borrow extensively for a home. Most importantly, since the difference between rates on conforming loans and private-made loans can vary widely (the lowest it’s been in 2 years was 0.48%, the highest was more than 1%, and the current rate is .064%), those striving to get a home will feel the pinch. This will be most noticeable in pricier zip codes in which home values have already dropped, such as San Diego, California.
The following are, according to Realtor.com, the top 8 most-searched expensive locations that are expected to see the most notable changes in their loan limits. Each city is presented with its current loan limit, what its new loan limit will be after October 1, and what the difference will be once you subtract the new limit from the old limit.
Photo via Wikipedia
San Diego, CA
Current Limit: $697,500
Limit After October 1: $546,250
Reduction in Limit: $151,250
Photo via Wikipedia
Fairfield, CT
Current Limit: $708,750
Limit After October 1: $575,000
Reduction in Limit: $133,750
Photo via Wikipedia
Los Angeles, CA
Current Limit: $729,750
Limit After October 1: $625,500
Reduction in Limit: $104,250
Photo via Wikipedia
Washington, DC (most counties)
Current Limit: $729,750
Limit After October 1: $625,500
Reduction in Limit: $104,250
Photo via Wikipedia
Orange County, CA
Current Limit: $729,750
Limit After October 1: $625,500
Reduction in Limit: $104,250
Photo via Wikipedia
Riverside-San Bernadino, CA
Current Limit: $500,000
Limit After October 1: $417,000
Reduction in Limit: $83,000
Photo via Wikipedia
Baltimore, MD (most counties)
Current Limit: $560,000
Limit After October 1: $494,500
Reduction in Limit: $65,500
Photo via Wikipedia
Boston, MA (most counties)
Current Limit: $523,750
Limit After October 1: $465,750
Reduction in Limit: $58,000
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Stephanie Huskey is the resident real estate blogger for Movoto and the only “jumbo” anything she can afford at the moment is the occasional jumbo lump crab cake she makes in her own kitchen. Interested in getting her advice on your blog? She’s currently seeking guest blogging opportunities so she can share her knowledge with new communities! You can find her over here at Elance.com.
