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Sep 28

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New Mortgage Limits

On October 1, 2011, Fannie Mae and Freddie Mac will reduce the size of mortgages it purchases.  The new lower limit will be $625,500, down from the current $729,750.  For most of the United States, this should be no big deal.  However, in some pricey places, this change can really hurt borrowers.  Limits are set on a market by market basis, which in part is based on local housing prices.  The following table highlights certain markets that will be hit the most.

 

Market

Current Limit

New Limit

Reduction

San Diego, CA

$697,500

$546,250

$151,250

Fairfield, CT

$708,750

$575,000

$133,750

Los Angeles, CA

$729,750

$625,500

$104,250

Washington, DC

$729,750

$625,500

$104,250

Orange County, CA

$729,750

$625,500

$104,250

Riverside-San Bernardino, CA

$500,000

$417,000

$83,000

Baltimore

$560,000

$494,500

$65,500

Boston

$523,750

$465,750

$58,000

The following link provides new loan limits by county: http://www.bankrate.com/finance/mortgages/new-fha-loan-limits-1.aspx

Mortgage bankers are working on obtaining new money to fund loans above conforming limits, or as they are more commonly known, “Jumbo Loans”.  Lenders are still willing to lend on these Jumbo Loans, provided the borrower has a high enough credit score and has enough cash to keep up with the mortgage payments.  The drawback for these Jumbo Loans is that they usually cost more, on average between 0.5 to 1 percent more.

About the author

Anand Khemlani

I am a founding member of Fulcrum Inquiry, an accounting and economic consulting firm that performs damage analysis for commercial litigation, forensic accountings, financial investigations, and business valuations. I am a Certified Public Accountant (CPA), Accredited in Business Valuation (ABV), a Certified Fraud Examiner (CFE) and am a licensed Real Estate Broker. I regularly serve as an expert witness involving results of my forensic accounting assignments and damage analyses. My resume is available on Fulcrum's website

Permanent link to this article: http://betweenthenumbers.net/2011/09/new-mortgage-limits/

1 comment

  1. Gabi

    Perfect weblog, I actually count on fresh news of your stuff.

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