If ya'll are watching or listening to the news, I am sure by now most of you have heard that there is an "Economic Stimulus" package sailing its way through Congress. You are probably familiar with the piece of it that will provide up to $600 for individuals or $1,200 for married couples, plus $300 per child if you earn up to a certain amount?
Well, another important part of this "package" (that is not getting really any media attention) is that it also increasing the conforming loan limit to $650,000 and the FHA loan limit of $729,000.
Why is this important? "Jumbo" loans (as of right now this is a mortgage over $417,000) that exceed the conforming loan limit are much more expensive and harder to find since August. The interest rates that accompany loans of this amount are 1-2.5% higher than the market rates that you hear all the time, plus the origination fees and other associated fees are much higher.
The Governator has been asking for the $417,000 conforming loan limit to be raised for a few years now; at least for California. $417k in Twin Falls, ID buys much more than Los Gatos, CA. Obviously this will have a huge impact to markets in parts of Southern California and the Bay Area, where prices are much higher and $417k gets you very little.
Plus, although prices have declined in the greater Sacramento area, there are still many transactions that happen well above current conforming loan limits (even with 20%+ down). I will be keeping my eyes on this...
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