As part of the 2008 Stimulus package, Freddie and Fannie - the government run agencies who purchase almost all mortgage debt, have enacted and used a temporary expanded conforming loan limit for one year duration, subject to renewal. The program allowed a lower cost of borrowing for designated high cost areas. In Fairfield County CT the expanded amount is 709,000. 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 using the actual prices of homes sold in geographic areas. The difference in rates between the two loan limits is 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%. 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.
Ever year there is buzz and speculation about the loan limit amount being extended for another year. The temporary loan limits for the jumbo conforming (or expanded conforming) expire October 1, 2011 - which means if your loan over 417,000 and more than the new lower expanded loan limits and is not closed and funded by Friday - September 30, 2011, your loan will have a price increase. Fir the first time since 2009, banks and lenders are gearing up to change their rate sheets to price and reflect non expanded limits - and are informing their loan officers to expect the loan limit to return to 417,000 for conforming and in Fairfield Count CT - the new perennate limit for expanded limits is reduced from 709,000 to a maximum of 635,000.
It now takes some lenders as long as 45 - 60 days to close a purchase loan. Most real estate contracts ask for at least 60 to 90 days for occupancy. Knowing the time frame from accepted offer to the close of a loan - it is 76 days from July 15 to September 30,2011.
The breaking news is - on Friday July 15, 2011 Representative Campbell (R) and Ackerman (D) have introduced a bill to extend the higher 2008 government loan limits for two more years.
It is imperative that consumers are aware of the risk, and more importantly for all lenders to be aware of the new expiration date and closely watch this new legislation.
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
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