The economic stimulus package working it’s way through the House offers some outstanding news for local San Francisco real estate.
If passed (and we think it’s likely to), the conforming loan limits for Fannie Mae backed loans will increase substantially. Conforming loans have MUCH lower interest rates. What this means is that more home buyers will be able to afford real estate in the Bay Area.
This is great news for 1st time buyers as well as anyone who wants to take advantage of the big discount.
It will only last for one year!
My guess is that this will stimulate real estate sales in SF and benefit both home sellers and home buyers.
Pay attention to this b/c when it goes into effect, you will want to benefit.
Here’s the meat of the article and a link to the full story:
How stimulus package will work
What: The tentative economic stimulus package would raise the limits on mortgage loans Fannie Mae and Freddie Mac can acquire. For one year, the limit would be 125 percent of an area’s median cost, up to $729,750, a big jump from the current $417,000.* Likewise, the package would raise the limits for Federal Housing Administration loans up to $729,750 in high-cost areas, up from the current $362,000.
Why it matters: Mortgages backed by Fannie and Freddie carry an interest rate a full percentage point or more lower than “jumbo” loans.
Local impact: The Bay Area median home price stood at $620,000 in December. If the loan cap is raised, many more homeowners and home purchasers here would qualify for “conforming” loans at lower interest rates.
Examples: For a 30-year fixed mortgage of $550,000, the monthly savings would be $353, Sen. Barbara Boxer’s office said. For a 30-year fixed mortgage of $650,000, the savings would be $417 a month.
What’s next: The package has to pass the House, which seems likely, and then go to the Senate. Congress aims to get a bill to President Bush by mid-February. Experts said if the loan cap is raised, the new limit would be reflected in mortgage offerings almost immediately.
More information: www.fanniemae.com; www.freddiemac.com; www.fha.gov.
*The limit is now $625,500 in Hawaii, Alaska and Guam, which were once viewed as the nation’s highest-cost areas.
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