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Mortgage Monday
Government Says Mortgage Loan Limits Stay the Same for 2011
A conforming loan is defined as a residential mortgage which FNMA and Freddie Mac will purchase from banks and other mortgage lenders. Thus the guidelines and standards of the loans offered by the originating lender will match those of Fannie and Freddie. The loans are either purchased or serviced by these entities (now owned by the United States and run by the government).
Each year the government does a quick analysis of the conforming loan limits to see if they should raise them or lower them. They do this based on how home sale prices were in the previous year. We all know that prices have gone down considerably and sales were real hard to come by. Nevertheless, for the sixth year in a row, the conforming loan limits were kept the same.
They are listed below:
- 1-unit properties : $417,000
- 2-unit properties : $533,850
- 3-unit properties : $645,300
- 4-unit properties : $801,950
High Balance Loan amounts also remain in effect through September, 2011
After the mortgage hell we went through a few years back, and are still drowning in, the government created a new loan product called the “high cost loan”, also known as jumbo-conforming. This is a second group of higher loan amounts which Fannie and Freddie are allowed (required) to purchase from originating lenders. The thought behind this was to allow people to get bigger loans but still qualify under the confirming loan guidelines and still get a decent rate. The interest rate was assumed to be decent because Fannie and Freddie could purchase and/or service them and the money will be free flowing. This did not work out exactly as planned, however after a few years of trying the interest rates are pretty good and the qualifying guidelines are consistent. Think of these loans as the old jumbo mortgage, anything over the allowable conforming loan amount but qualified as a conforming loan.
Jumbo conforming loans vary by geographic area and are organized by zip code. Each area is analyzed according to current home values and sale prices which dictate how high the new loan amounts will go. In any regard, the highest it can go up to nationally is $729,750 for a single family home and this would be in the big city areas. Think New York, Los Angeles, Boston and Chicago. Anything else will vary somewhere in between.
You can find out what the loan limits are in your area by going to the FHFA link below:
Point being, we still have a lot more to go through this year. Follow us through the new year to keep up with the changes in mortgages.
Best-
Dale Robyn Siegel