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Friday, December 12, 2008

2009 Home Loan Limits - New Rules!

2009 Loan Limits - Sexy!

So……. Loan limits eh? Pretty exciting stuff Hans! Yeah well it may not be that exciting but if you are thinking about buying a home it is very important. So here’s the scoop, our loan limits in Sonoma County have gone up.

Our basic conventional loan limit for 2008 was $417,000 but Congress voted in higher loan limits for conforming and FHA loans (as high as $729,750). It was a bit of a mess. We had one set of rules for loans up to $417,000 and an entirely different set of rules (and higher rates) for loans above $417,000. The bottom line is that Congress told my industry what to do but did not tell us how to do it and so it didn’t help as many people as it could have or should have.

So for 2009 the new loan limits are..... insert drum roll here……… $417,000! HUH!?! Here comes my favorite part ……. There are provisions for higher loan limits in high cost areas. We’ve always had these in Hawaii and Guam but never anywhere else. Now we have them in any area that is determined to be a high cost area. Of course there are all kinds of rules and formulas but I will make it easy for you, here is the chart:

* The limit may be lower for a specific high-cost area; use the resources below to see limits by location.

In Sonoma County, our limit is $520,950 for 1 unit. In Marin and most of the bay area, the loan limit is the new maximum of $625,500. The limits are even higher in Hawaii and Guam.
The real news here is that there is only one set of rules and one set of rates. These new loan limits apply to FHA loans as well and that is a good thing. Normally if we had the kind of market that we have had this past year, our loan limits would have gone down. So we are actually making progress and on our way to actually helping the consumer.

As I write this, rates have just come way down and are currently hovering around 5% to 5.5% for a 30 year fixed rate loan. There is talk about the treasury investing in low priced mortgage backed securities. The goal is to drive mortgage interest rates lower. The plan is not fully cooked yet and they’re not sure if they will include refinances in this new offering or not. Read between the lines people - it’s just talk at this point.

So basically it is just another normal day in my crazy business. There’s a lot of speculation, there’s a lot of movement and volatility, and no one really knows what’s going to happen from day to day because we don’t have that crystal ball. If I did, I would be on white sand beach sipping a drink with an umbrella in it (virgin because I don’t drink).

Now remember, we can get FHA loans with 3.5% down up to a $520,950 loan amount. FHA has even revived an old program called FHA Access which will allow 100% financing. So not only is it a great time to buy but it could be a great time to refinance as well.

I welcome questions about home loans and the real estate market in general. Please let me know what you want to hear about in future articles.

Hans Bruhner, CMPS is licensed in CA & HI. If you have a question, please contact Hans at (707) 887-1275 or . First Priority Financial, Inc. is licensed by the CA DRE #00654852.