New FHA backed mortgage loan limit increased to 729K - Old Jumbo becomes Conformal

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Now to the article:

Many homeowners and home buyers are sitting on the sideline and thinking what they should do. Homeowners are thinking if they should put their homes on the market. Home buyers are thinking if this is the real estate market has bottomed out and they should jump into buying homes.

No matter where you stand the new FHA backed mortgage limit has been increased to $729K in high cost area and yes bay area in California is definitely a high cost area.

Previously conformal loan limit was only $417K and any loan higher than that was considered a jumbo loan with 1 to 2 percentage points higher rates than those for conformal loans.

It was announced today that most of the counties in bay area fall under the high cost area and that is a good news for both home owners and home buyers. Why?? Keep on reading.

Most of the single family houses are priced more than $417K, which was the conformal loan limit backed by Fannie Mae and Freddie Mac. The loans more than the conformal amount are named "Jumbo" loans and the APR on them are around a percentage point higher than the rates on the conformal loan. With the jumbo loan limit raised to $729K you can get the same conformal rate and getting loan becomes easier as they are backed by our government backed Fannie Mae and Freddie Mac.

Having a loan of $729K available with conformal rate is a boon to home buyer who are thinking of getting into the market. I think this is high time those side liners jumped into buying houses.

President Bush signed the "stimulus package" and this new limit will be effective till Dec, 2008. The new higher limit applies to only high cost areas. What will happen after Dec 2008?

Nobody knows. If the economy doesn't improve and housing market still goes further south then maybe the government may decide to extend the time for new jumbo loan a bit more.

Government has a bad habit of not taking back financial give aways and making them permanent sooner or later. Considering higher inflation and slowing economy it's quite a possibility.

But anything said about that would be speculation because no body knows where the housing market and overall economy would head towards the end of 2008 with stimulus package in place.

The new jumbo loan limit should help housing market as more people with affordable monthly mortgage payment would be able to buy houses and there are many people who are waiting to buy a house for a while now.

It was expected that last year (2007) spring and summer time would create more demand for houses but buyers didn't show up. Spring season is the start of housing season as people start looking for houses and put offers. Let's see what happens in 2008.

I have been talking to a few lenders but nobody is yet offering the loan with new jumbo loan rate. It's expected that the banks and lenders would be able to provide new jumbo loan rate around the middle of March 2008.

So if you want to take this great opportunity of new jumbo loan limit and you have been waiting for a while to buy a house then consider your options again. This time the picture looks rosy and mortgage looks affordable even on 30 Yrs. fixed loan.

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I think that they aren't

I think that they aren't sure probably because they do not know for sure if the housing market has bottomed out completely or could there still be more ripples.

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Exactly most people are

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I have been stalking rates

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