Loan Limits they are a changing ... and rates

For the last several years Freddie and Fannie - the government run agencies who purchase almost all of the major lenders mortgage debt have had a temporary expanded conforming loan limit. The conforming loan limit has been 417,000 and less, and the jumbo conforming loan limit (or expanded conforming limit) has been a maximum of 729,500 for high cost areas. The number used for the loan limit is determined by a government agency and is based on a formula of the actual prices of homes sold in specific determined areas. The difference in rates between the two loan limits was often less than .250% in the rate - if a 417,000 30 year fixed is 4.50% - a 729,500 30 year fixed would be 4.750%. . This was part of the original stimulus package to lower the cost of borrowing for areas of the country, such as Fairfield County CT, so more people would be encouraged to purchase a home. Before the stimulus package, any loan over 417,000 was considered a jumbo loan and often the rate price increase was more than 1% above the conforming loan limits for fixed rate - thus the popularity of ARMs for Jumbo Loans - their prices were often more in line with conforming 30 year fixed - or lower. The temporary loan limits for the jumbo conforming (or expanded conforming) expire October 1, 2011 - which means if your loan over 417,000 and less than 729,500 (in some areas) is not closed and funded by Friday - September 20, 2011, your new loan will have a price increase. This year, more and more banks and lenders are now gearing up to change their rate sheets to non expanded limits - and are informing their loan officers to expect the loan limit to return to 417,000. And very very soon, to lock loans with the new guidelines in place. It now takes some lenders as long as 45 - 60 days to close a purchase loan. And most real estate contracts ask for at least 60 to 90 days for occupancy - so the banks and lenders are gearing up for the deadline - knowing the time frame from accepted offer to the close of a loan, and 75 days from July 14 is September 27,2011.
If you are considering purchasing a home before September 30, 2011 - and you have not made an offer or locked in your loan - the window of time is getting more and more narrow and the time to act is now.


30 year fixed - 4.375% + .375 cost points for rate
20 year fixed - 4.1250% + .250 points for rate
15 year fixed - 3.625% 0 points for rate
10 year fixed - 3.250% with .250% credit for rate
5/1 ARM - 2.750% - 0 points for rate
7/1 ARM - 3.125% - 0 -points for rate

FHA/VA
30 year fixed - 4.375% with 0 points for rate
5/1 ARM - 3.00 with 0 points for rate
7/1 ARM - 3.375 with 0 point for rate

Jumbo - over 729,000
30 year fixed - 4.99% with 0 points  for rate
15 year fixed - 4.50% + .250 cost points for rate
5/1 ARM - 3.50% - 0 points for rate
7/1 ARM - 4.00% - 0 points for rate