Here is a wonderful thought for this Monday morning. I just spoke to one of my favorite mortgage guys, Tim Fiero, of Home Lending Services. I was asking about how things are shaking out for Jumbo (AKA, Non-conforming) loans as the new conforming loan limit is now set at $546,250 for San Diego. According to Tim, if Congress doesn’t do something fast, the higher-end home market could be in a lot of trouble. Right now, there are few lenders who will even originate a 30-year fixed rate Jumbo loan. Countrywide/Bank of America will, but at about 8%, plus 1.5 points. You can get a 10/1 ARM at 6.5% with 1 point, but face the potential for a refinance down the road. I hope the National Association of Realtors (NAR), California Association of Realtors (CAR) and Congress jump on this problem, as Jumbo loan rates are already making a challenging environment worse.
Even with the new “Conforming” loan limit, there remains a 3-tier interest rate system - 1.) $417,000 or below (the “old” Conforming loan limit); 2.) $417,001 - $546,250 (the “new” Conforming loan limit; and 3.) Above $545,250 (Jumbo land). If you are in the market to buy, check with your local lender for changes, which are happening on a daily basis. If you are a seller, you need to know what your potential buyer is facing.
BTW - If you are planning to refinance your existing home to pull equity out for a new home, most lenders will limit the borrower to no more than 70% L-T-V (Loan-To-Value) and a real, signed rental agreement, along with a copy of your tenant’s deposit check. In the past many of these “bridge” loans apparently were approved with fake rental agreements. No more.
If anyone has more information on these or other financing issues, please feel free to chime in.