It’s likely many mountain homeowners haven’t heard that the high-cost maximum loan amounts as defined by FNMA & FHMLC are going down.
Currently, borrowers can finance up to $729,750 and still qualify for the conforming conventional interest rate in some areas of the country. Loan amounts above the maximum are subject to higher “Jumbo” mortgage pricing.
With the recent fall in home prices and the higher profitability of Jumbo loans for mortgage banks (higher spreads), October 1st brings the first decrease in the maximum loan amounts since I’ve been in business as a mortgage originator (1993).
The maximum loan at each of the three federal mortgage giants will fall to $625,500. For Coloradoans, the counties affected are Summit, San Miguel, Routt, Pitkin, Lake, Eagle & Boulder.
Word on the street is that housing and realty lobbies are pushing for a continuation of the $729,750 high-cost area maximum, but banks don’t appear to be along for the ride.
For more information – http://www.efanniemae.com/sf/refmaterials/loanlimits/