New Conforming Loan Limits!! You just got 1.25% off your Interest Rate for New Loan!!
January 29th, 2008 . by Mike KellyGSE (Government Sponsored Entities or Fannie Mae and Freddie Mac) and the new (Conforming) Loan Limit Increase
Time Frame. Mortgages originated during the period beginning on July 1, 2007, and ending at the end of December 31, 2008. The limits will “sun-set” end of THIS year!!
Calculation of New Conforming Loan Limit. The limitation on the maximum original principal obligation of a mortgage that may be purchased by the GSEs shall be the higher of:
(1) the conforming loan limitation for 2008
(2) 125 percent of the area median home price, but in no case to exceed 175 percent of the conforming loan limitation for 2008.
Definition of Area and Area Median Home Price. The areas and area median prices are the areas and area median prices determined by the Secretary of Housing and Urban Development. The Secretary of Housing and Urban Development shall publish the median house prices and loan limits for all areas as soon as practicable, but in no case more than 30 days after the date of the enactment of this Act. With respect to existing areas for which the Secretary has not established area median home prices before such date of enactment, the Secretary may rely on existing commercial data in determining area median prices and calculating revised loan limits.
Effect on the GSEs’ Housing Goal Obligations. High cost area mortgages purchased by GSEs shall not be considered in determining GSE performance with respect to any of the housing goals and shall not be considered in determining compliance with such goals
Securitization Sense of Congress. It is the sense of the Congress that the securitization of mortgages by the GSEs plays an important role in providing liquidity to the United States housing markets. Therefore, the Congress encourages the GSEs to securitize mortgages acquired under the increased conforming loan limits established in this section, to the extent that such securitizations can be effected in a timely and efficient manner that does not impose additional costs for mortgages originated, purchased, or securitized under the existing limits or interfere with the goal of adding liquidity to the market.
FHA Loan Limit Increase
Timeline. For mortgages for which the mortgagee has issued credit approval for the borrower on or before December 31, 2008.
Calculation of New FHA Loan Limit. Mortgage principal obligation does not exceed the lesser of:
(1) 175 percent of the conforming loan limitation for 2008
(2) 125 percent of an area’s median home price
Discretionary FHA Loan Limit Increase: If the Secretary of HUD determines that market conditions warrant such an increase, the Secretary may increase the maximum FHA loan limit by not more than $100,000.
If i am doing the math right - the increase in most areas of the country will be under the existing 417,000 limit now in place. The increase the way I read it is 125% of area median home prices. Most areas like philadelphia and its surrounding areas have a median price of 308,090 according to current data. 308,090 X 125% = 385,000. How does this help?