A few months ago, I informed you that the Fannie Mae, Freddie Mac, and FHA extended loan limits are due to expire on October 1, 2011. (Click here to read my original article, Maximum Loan Limits Being Reduced??) In the New York Metropolitan area, this means that the conforming-jumbo loan limits will drop back to $625,500 from their current $729,750 cap. (These numbers apply to single-family homes. Two through four family home loan limits are higher.)
There is still concern that eliminating this portion of government-backed mortgage securities will result in reduced availability and thus, higher costs to consumers looking for jumbo loans. However, many lenders have been preparing to fill the void.
Many community banks have portfolio jumbo programs, mortgages they keep within their portfolio of investments. And some of the larger, institutional lenders see an opportunity to bundle these loans into securities created by the private sector, rather than the government-sponsored agencies like Fannie and Freddie. But these products are often limited to adjustable rate mortgages and short-term fixed rates. The availability of a 30-year fixed rate mortgage is much less common. And underwriting requirements are often more restrictive, with some lenders requiring down payments of 30% or more, or post closing liquidity of as much as 20% of the loan amount. Plus, interest rates on these fixed rate mortgages are bound to be higher than those loans backed by Fannie and Freddie.
If you’re contemplating a purchase or refinance, and see yourself needing a jumbo mortgage, my advice is DO IT NOW. For after October 1st, rates may be higher, you may find it more difficult to qualify, or the loan product that best suits your needs may be unavailable entirely.
Contact me now for a free consultation. 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. Since 1992, he’s been sharing his financial knowledge and wealth-building strategies, including how to properly use your mortgage as a financial tool. His clients regularly express their trust and appreciation by recommending friends and family call when in need of mortgage, real estate, and financial guidance.