Mortgage And Loan Limit Changes

Hi Everyone, happy Friday to you. Well, it might finally be upon us – there may be mortgage and loan limit changes coming soon. There have been a lot of calls for action from our Realtor Associations and within our industry recently to have Congress continue to support our Fannie Mae and Freddie Mac regional loan limits. Locally here in Costa Mesa, loan limits are currently $417,000 for what is called a conforming loan, $729,500 for a Super Conforming, and everything over $729,500 is considered a Jumbo Loan.

 

As a consumer, each higher step of a loan costs a little more in terms of rate that you pay each month. Our current limits are set to expire on September 30th of this year. We are considered to be in a “high cost” area, which allows for a higher loan limit on our tiers of loans. The one concerning change for us in Costa Mesa, both for buyers and sellers, is that the Super Conforming/Jumbo number will possibly be coming down to $625,000 for our area.

 

There will be little net effect to a seller who is selling a condo or entry level home in Costa Mesa, especially for those homes priced under $417,000. The real concern should these limits not continue would be for the buyers or sellers of properties in the $650,000 range and higher. For those looking for a property priced at say $825,000 in Costa Mesa, the higher loan limit of $729,500 allows for a standard down payment of 20% (and less in certain conventional and FHA programs) but might look drastically different should the loan fall in the new proposed $625,000 range.

The concern a Costa Mesa real estate seller might have is that they might not be able to attract the right qualified buyers and therefore need to lower their price so they fall into the right category to attract buyers who can get a higher tiered loan….it’s an evil cycle, no doubt.

Hopefully Congress will maintain the current loan limits to continue to stimulate the local Costa Mesa real estate market and the local economy in general. Each area’s home sales are different, but one projection for a local Chicago sale estimates that for each home sold locally in that region, a total of $25,881 is produced for the local economy! Not bad! Our local economy could certainly use that support.