New limits set for jumbo conforming loans in Eagle County
Dollar limits on jumbo conforming loans, or agency jumbo loans, were set to expire on Dec. 31, but have been extended through 2009. These ambiguous loan limits are based on 115 percent of the median sales price of homes per specific county. While the FHA has yet to set its revised limits, Fannie Mae and Freddie Mac have released their terms for 2009. For 2008, the agency jumbo loan limit for Eagle County was set at $729,750. For 2009, Fannie and Freddie have reduced their limit to $625,500. Even for those of us in the industry, these terms and limitations are somewhat confusing.Essentially, there are three tiers of loans when it comes to the loan amount. Conforming loans are for amounts less than or equal to $417,000 and have not changed since January 2006. Loans less than or equal to $417,000 are thought to present the least amount of risk; therefore, they have the best-case scenario for interest rates. Loan amounts greater than $625,500 (for 2009) are considered jumbo loans. Jumbo loans once fueled the real estate markets and secondary investors flocked to buy them from Wall Street. Now jumbo loans are perceived to present too much risk and carry a hefty premium. Jumbo conforming, or agency jumbo, loan limits came to be in February 2008. The loan limits were adopted as a temporary solution to help jump-start the housing and mortgage markets by making loans with higher balances more affordable with lower interest rates than jumbo loans. For those who obtained a jumbo conforming loan in 2008, or who will in 2009, the legislation does provide a more affordable financing solution as the rates are indeed lower than traditional jumbo rates. Revised loan limits released by Fannie and Freddie are evidence that property values are dropping and lenders are continually less willing to take on risk and exposure in the real estate markets. Furthermore, these loan limits are also evidence of the uncertainty in the financial markets as their rates, adjusting factors, limits and longevity are quite erratic.Regardless of what mixed signals and ambiguity the conforming jumbo loan limits do send, they are evidence that the government is trying to rectify the current situation. Opportunities are present but more so now than ever, it takes an experienced and knowledgeable mortgage professional to guide borrowers through the maze.William A. DesPortes is a managing member of DesPortes, Selig & Associates, Professional Mortgage Services. He can be reached at 970-926-9393 or firstname.lastname@example.org.
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