Expiring September 30, 2011: Super Conforming Mortgage Loan Limits
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When the economic crisis began a few years ago, the government temporarily increased loan limits in high cost areas across the country because many lenders would have refused to make those loans without the government covering the risk of default. But now these loan limits are due to expire, and this is a big deal because mortgage rates are typically much lower when they are supplied through Fannie Mae and Freddie Mac.
If you are looking to finance a large loan through the government, it's important to act quickly. Get in now or you could be paying higher rates.
That's because when these loans are no longer allowed under Fannie Mae and Freddie Mac, they will be considered non conforming (Jumbo) loans, and these usually have a much higher rate because they will be backed by private investors and not Fannie Mae or Freddie Mac.
In similar fashion, the FHA loan limits that were increased in 2008 due to the economic downturn are also scheduled to revert back to lower loan limits (those determined under the Housing and Economic Recovery Act of 2008) for loans insured by FHA on or after October 1, 2011. According to a brief released by the Department of Housing and Urban Development in May, this means that "FHA loan limits would likely decline in 669 of the 3,334 counties or county equivalents that are eligible for FHA insurance." If you are planning to finance a large loan through the government, it is important to be aware of this time line and to act accordingly.
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