In 2008, when the mortgage implosion began, the availability of jumbo money became scarce. (Jumbo mortgage loans for single-family homes are loan sizes that exceed $417,000. Two through four family home loan limits are higher.)
The availability of jumbo money has traditionally come from third party sources other than Fannie Mae and Freddie Mac, such as hedge funds, and pension funds. However, when the credit crisis began, these sources dried up, causing jumbo mortgage rates to skyrocket. Congress required Fannie and Freddie to purchase these loans, thus bringing liquidity back to this market. Jumbo-conforming loan limits were born and rates dropped back to normal levels.
In the New York Metropolitan area, the conforming-jumbo loan limits have been $729,750 (for single-family homes). The Obama Administration has proposed allowing these limits to drop back to $625,500. This would certainly limit loan options above this limit, making such loans costlier to obtain.
These higher loan limits are due to expire on October 1, 2011. As of now, it’s anybody’s guess whether Congress will once again extend the $729,750 loan limit. But one thing is for sure; the uncertainty won’t help a real estate market already struggling to recover.
The economy has been showing signs of stability, if not a slow recovery. Home prices in most locals are unlikely to fall any further. As the economy continues to improve, it seems almost inevitable that interest rates will rise throughout the year. And if your plans require a jumbo mortgage loan, they too might be more expensive, with less loan options available after October 1st.
To all potential homebuyers that are still sitting on the fence, my advice is this:
BUY NOW. If you’re truly serious about owning a home, the timing may never be better.
Contact me now for a free consultation, before you find a home. We can discuss your homeownership needs, your current financial situation, and your mortgage qualifications. I’ll ensure that you’ll be perfectly qualified. Then once you find your dream-home, I’ll ensure your mortgage complements your financial needs today, helps you attain your financial goals tomorrow, and that you’ll enjoy your new home for years to come.
Warren Goldberg is a Mortgage Planner and published author. His interviews include Blog-Talk Radio, Newsday, and the Long Island Herald. His newsletter is read by almost two thousand subscribers.
Since 1992, Warren Goldberg has helped thousands of clients own their homes, refinance their mortgages, restructure their debts, and invest in real estate. Warren is known for his wide knowledge of mortgage products and wealth-creation strategies.