Loan limits just went up

Loan limits for Fannie Mae and Freddie Mac have recently increased, into jumbo-loan territory. This is great for buyers in Santa Fe. Remember when the highest Fannie Mae loan was $417,000 not too many years ago? Well, nowwe have a Fannie Mae limit at $484,350.

This is significant because interest rates below the Fannie limit are lower than rates for loan amounts above the limit. What is so important is that below the FannieMae limit, homeowners have lower mortgage payments.

This means it is a great time to purchase in Santa Fe! On top of this major Fannie Mae advantage comes a new high-balance product for New Mexico. This new product reaches up to $726,525. You’ve got to love the full name of the product: the “conventional nationwide high balance fixed.” With a newnationwide product, the underwriting is like a Fannie Mae loan and is priced very similarly. The loan can go to a 90 percent amount with no mortgage insurance for a primary residence.

Lets look at a $484,350 30-year conforming loan at a rate of 4.375 percent, with a monthly payment of $2,418.29. If we were forced to price this as a jumbo loan, prior to the increased limit, the rate would be 5 percent or $2,600 per month. That represents a savings of $10,908 over five years, quite a difference.

Work with a knowledgeable mortgage company so you can take advantage of these new loan products. Not all lenders have access. I have found that timing as to when to lock the interest rate for a loan is critical. Study the decisions of the Federal Reserve Bank and watch the stock markets around the world. Particularly watch the U. S. Treasury Bond yields. They are leading indicators as to the direction we expect for interest rates.

Homeownership is a goal for the vast majority of Santa Fe residents. Lower interest rates are always well received as lower rates allow more families to experience the benefits of home ownership.

Jim Gay was a real estate broker for 20 years and has been a consultant to Fortune 500 companies. He is currently a broker/ owner atThe Mortgage Place, Inc. and can be reached at 986-9080 or jim@jimgayhomemortgage.com