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President Signs Loan Limit Increases

Crofton home owners and home buyers alike could be affected by the economic stimulus package signed by President Bush.

300,000 more homes are likely to sellThe law signed this week includes several important housing provisions including temporary increases in the loan limits for Fannie Mae, Freddie Mac and FHA mortgages.  

According to an impact study performed earlier this month by the National Association of REALTORS (NAR), the increase in conforming loan limits will probably result in 500,000 refinanced loans,  reducing foreclosures by as many as 210,000 nationwide.  This will give another option to home owners faced with an ARM adjustment before December 31, 2008, when the temporary increase expires.

“While such an increase will not solve the full range of housing challenges, it will play a vitally important role in improving the nation’s economy and making the dream of home ownership more attainable for thousands,” said NAR President Richard Gaylord, a RE/MAX broker in Long Beach, California.

Additionally, over 300,000 home sales could be generated by the higher limits, reducing the housing inventory and hopefully strengthening home prices by two to three percentage points.

While the parameters of the new loan limits have not been determined yet, one estiimate of the new limit is $729,750 for high cost areas, based upon 125% of the local median home price.  HUD is calculating the final numbers now and must publish them by March 14.

FOC - FNMC lenders croppedThe loan limit has come a long way since I started in real estate, when it was $33,000 – just enough to buy a townhouse inside the Crofton triangle.  There have been many loan limit and price increases since then, and the anticipated new FHA loan limit would be double the sale price of most Crofton townhomes. 

If you have any questions about this or anything else related to home financing, contact Chris Washburn or Jeff Morelli at FNMC. (pictured at left)

 

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