Qualifying for a jumbo conforming loan will get more difficult in the New Year.
Congress authorized, as part of the Economic Stimulus Act of 2008, a temporary increase to the conforming loan limits in high cost regions – defined by median home sale price. High priced areas such as Los Angeles, a mortgage as high as $729,750 is considered conforming. Conforming loans have terms and conditions that follow the guidelines set forth by Fannie Mae and Freddie Mac.
Beginning in 2009, loan limits changes. Effective January 1st 2009, conforming mortgages will be capped at $625,500 in high cost areas, and $417,000 everywhere else. If you are in a high cost area, timing may be important to you. You may want to consider taking advantage of a cheaper conforming loan this year if you need to borrow between $625,500 and $729,750, or risk paying the jumbo loan premium.
