The biggest news today in the Real Estate Industry in Santa Cruz and across the country is that the Stimulus Plan was approved yesterday by the President. Part of the plan is to allow HUD to increase the conforming loan limits from $417,000 to as high as $729,750 in high cost areas.
What will this mean for Santa Cruz County? We can’t be exactly sure yet, as it will take up to 30 days for HUD and Fannie Mae to set the new limit and then more time after that for the lenders to adjust their programs. I have talked to several different mortgage brokers, and they are optimistic.
What many in the industry are hoping is that the increased conforming limits will help more buyers to qualify and afford the high cost of property in the Santa Cruz Area. Currently, there are tight guidelines to qualify for jumbo loans.(over $417,000). Unless you are buying a smaller condo or have large down payment, you will need at loan over $417,000. Right now those Jumbo loans can be as much as 1-2% higher than the interest rate for the same loan under the conforming limits. For someone buying a $700,000 property, this could mean savings of hundreds of dollars per month. Property owners who are trying to sell in this market are hoping that this will help bring buyers off the fence.
Once the new limits are in effect, anyone who currently has a loan over $417,000 will want to consult with their banker or mortgage broker to see if it makes sense to refinance. If you need a referral for local banker or broker let me know, or just visit the LOCAL page on my website, www.AtHomeInSantaCruz.com .
-Mike
The following came from the California Association of Realtors
PRESIDENT SIGNS $168 BILLION ECONOMIC STIMULUS BILL
President Bush today signed off on the $168 billion stimulus package approved by Congress last week, which, in addition to tax rebates for millions of working Americans and business owners, includes a vital, but temporary increase in the conforming loan limit. The economic stimulus package will allow the Federal Housing Administration, as well as Fannie Mae and Freddie Mac to offer mortgages above the current conforming loan limit of $417,000 to as much as $729,750 in high-cost areas for loans originated between July 1, 2007 and Dec. 31, 2008.
“The actions of Congress and our president represent a significant victory for homeowners across the state and nationwide,” said C.A.R. President William E. Brown. “C.A.R. has long fought for increases to the conforming loan limit in order to close the gap for would-be home buyers in high-cost areas, such as California, and, with the spotlight now fully shining on this important issue, will continue those efforts and push for permanent changes beyond Dec. 31.”