New Conforming Loan Limits Announced For 2009
Posted by Kevin Kueneke | Currently 1 Comment »
After months of speculation, we finally know what the new 2009 high balance conforming loan limits are for San Diego and other “high cost” areas. The Federal Housing Finance Agency (FHFA) said that the $697,500 number we enjoyed for part of 2008 is dropping to $546,250 in San Diego.
Some areas such as Los Angeles-Orange Counties, San Francisco, San Jose, and Santa Cruz are having their 2009 numbers set at the new maximum of $625,500.
According to FHFA’s press release, the 2009 loan limits were calculated using 115% of median house prices as determined by the Federal Housing Administration (FHA) whereas the 2008 loan limits were calculated using 125% of median house prices.
So what does this mean? It means that anyone currently in escrow in San Diego with plans to borrow more than $546,250 needs to do everything they can to get their loan closed before 12/31/2008 or face significantly higher interest rates. There is almost a 2% interest rate difference between loans less than $697,500 and loans greater than $697,500 (also known as true jumbo loans) because conforming loans are guaranteed by the government (FNMA and FHLMC). Guidelines are also more strict for true jumbo loans than for conforming and high balance conforming loans.
As expected, the Federal Housing Administration (FHA) announced that FHA Jumbo limits will match the high balance conforming limits. The Department of Veteran’s Affairs (VA) said that VA Jumbo loans with zero-down payments will be allowed up to the high balance conforming loan limits through the end of 2011. This is good news for FHA and VA buyers as they will still be allowed to take advantage of these programs for higher priced properties.
Any questions or comments? Please email me at Kevin@MyCWMtg.com
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Fannie And Freddie Bailout…My First Take
Posted by Kevin Kueneke | Currently 2 Comments »
By now, most everyone has heard of the announcement made last Sunday that the government is officially bailing out Fannie Mae (FNMA) and Freddie Mac (FHLMC), the two mortgage giants that own or guarantee about $5 trillion in home loans. Both CEO’s are being replaced and the new heads will report to the newly formed Federal Housing Finance Agency which was created under our friend the Housing and Economic Recovery Act.
Although the bailout is in itself a complicated issue, it is better than the alternative which is a complete failure of the two companies. A complete failure could have led to a catastrophic freeze in the mortgage market, essentially a lack of money to fund new loans. Overall, the bailout is positive news which is what the housing industry needs right now.
There will be an injection of up to $100 billion in each of the two companies which could help lower mortgage rates and add stability to the economy. These lower rates and added stability could entice banks to become more willing to write new purchase-money loans as well as refinance existing loans.
We have already seen a dramatic decrease in rates since the announcement. From Friday 9/5/2008 to Monday 9/8/2008, Conforming 30 year fixed rates dropped about a half percent! In my fifteen years of lending, I cannot remember a time when rates decreased that much in such a short period, even during the last big refinance boom that ended in 2003. I have had many potential buyers coming out of the woodwork asking how much more they can afford at these lower rates. Their buying power has been significantly increased basically overnight and right now is a fantastic time to buy a home. The key will be if these rates can hold at these low levels.
It is still hard to tell how all of this will be absorbed in the long run. One concern is that taxpayers will shoulder the financial burden of the bailout, especially if market conditions worsen. Lower mortgage rates alone will not fix the housing crisis as there are still too many houses on the market. There have been several cries to loosen the recently tightened lending guidelines, but it is doubtful that we will see the return of the Wild West of loan guidelines from a year or so ago as those guidelines helped get us into this mess in the first place. There is obviously no quick fix to the housing situation, but combined with other recently passed legislation, this may be a start.
If you would like to discuss this further, please feel free to call me at (760)500-1919 or email me.
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Shopping for a Home Loan - Be Sure to Compare Apples to Apples
Posted by Paul Gonzales | Leave A Comment »
You’re a smart cookie, so you called five different lenders and “shopped” for your home loan. If you are like most folks, you asked “what’s your rate?” and each lender tossed you a quote. What’s your next move - do you go with the guy that quoted you the lowest rate? You probably shouldn’t and here’s why - you didn’t ask enough questions.
Interest rate quotes by themselves literally mean nothing. This is because, all other things being equal, you can get a lower rate by paying ‘points’ or other closing costs. On the other hand you may reduce or even avoid those extra expenses by accepting a higher interest rate. The problem you have when you ’shop’ is that each lender is simply tossing you an interest rate without explaining what it will cost you to get it. They simply want to take you off the market with whatever you want to hear - they’ll clue you into the full picture later.
Your job is to get the full picture right up front! Here’s how:
- be very specific about the kind of loan you want (30 year fixed, interest-only payments etc.. Rates very depending on the type of loan you are seeking)
- When they quote you an interest rate, ask them if that particular rate requires your payment of any discount points, an origination fee or application fee.
- finally, ask them to give you an estimate of your final and total closing costs including an appraisal and credit report
A final word about interest rates:
Mortgage rates for all lenders are subject to the frequent and rapid changes in the financial markets. They can (and commonly do these days) change literally hour-by-hour, much as the stock market does. In recent months we have actually seen interest rates on mortgages rise and fall as much as a half of a percent in the same day. The point is that if you are leisurely “shopping” for the best deal over a period of several days or weeks, your information has already gone out of date and you have no basis for a sound comparison.
The key is to recognize that rates alone are only half the picture. You also need to know the costs involved in getting those rates and talk with lenders preferably on the same business day, so you can compare “apples to apples”, instead of “soup to nuts”. The bottom line, however, is still choosing to work with a lender whom you can trust and who will work hard to get you the best interest rate-and-cost package you can qualify for. And that may definitely not be the the person tossing out the lowest rate of the day!
Call me for a complete discussion of interest rates and costs on your next home loan! (800) 775-7334 or email me at paulforloans@aol.com
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Buying A Home Should Be Exciting…
Posted by Kevin Kueneke | Currently 1 Comment »
Unfortunately, the process can also be very stressful. Here are a few things to keep in mind when looking for a home that can help the process go a little smoother and hopefully keep it fun.
Firstly, find a real estate professional with whom you connect. Home buying is both a financial and emotional commitment and it is critical that the real estate professional you choose is not only highly skilled but also a good fit with your personality. Just as important is to find a competent mortgage loan officer, someone that keeps up with the ever changing mortgage market. Many loans that were available six to twelve months ago are not available now. Someone that “does loans on the side” may not be current.
There is no perfect time to buy a home so if you find the right home, do not try to second-guess interest rates or the housing market by waiting longer as you risk losing the opportunity. Worthwhile homes are now being priced to sell and are receiving multiple offers. Mortgage interest rates can increase dramatically in a short period of time drastically affecting your borrowing power. It is very important to plan ahead, get your ducks in a row, and get pre-approved for a mortgage prior to shopping. You must be realistic and know what you can truly afford.
One of the biggest problems I had when I was shopping for my first home was that I had trouble accepting that no house is perfect. There was something wrong with each and every home. If the kitchen was right, the bedrooms were too small. If the yard was the perfect size, the house was on a busy street. Best bet is to make a list of your top priorities and focus on things that are most important to you and let the minor ones go. 
Do not forget to factor in maintenance and repair costs in your post-home buying budget even if you buy a new home because there will always be costs. I had to buy a lawnmower, a rake, yard waste cans, you name it. Worse yet, the existing carpet, which seemed fine with the seller’s furniture on it, looked old and worn once I had moved in my furniture. Then my furniture looked old and worn with the new carpet…
Buying a home, especially your first home, is a big financial commitment and should be well thought out. Preparation is key. Did you ever take a test in school without studying, choosing the “I’ll just wing it” approach? I have and it was no fun.
Plan ahead. Rely on the experts. Keep it fun.
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