FOR IMMEDIATE RELEASE:
Fannie Mae and Freddie Mac are federal national mortgage agencies that are charged with the responsibility of maintaining smooth functioning and adequately financed mortgage markets. Until March of 2008, the agencies were only permitted to underwrite and insure conventional loans, or those that did not exceed $417,000. The new loan limits vary somewhat by area, but go as high as $793,750 for those taking out a mortgage to purchase in the priciest markets.
Limits for FHA-insured loans were also boosted. They used to be capped at $362,790, but now mortgages up to $729,750 can qualify for FHA insurance. The new loan limits affect 71 metropolitan areas, as well as 21 counties that lie on the outskirts of those major cities.
Because of a recent lack of jumbo mortgage financing, homes priced between $450,000 and $850,000 have offered the best bargains of all. Despite the attractive prices and alluring potential for built-in equity when the market rebounds, no decent financing was available. So the homes have been languishing on the market, waiting for buyers to figure out how to come up with the money.
The lack of financing combined with a precipitous rise in foreclosure inventories and a slowdown in new construction to cause exceptionally low prices in this uniquely high-end market. The exceptionally large current available home inventory in the upper price range is diverse, value-laden with amenities, and geographically dispersed. In other words, now is a rare opportunity to buy high-end property at bargain basement prices, all over the USA.
Once the domain of only the rich and famous, the jumbo loan price range can now represent nothing more than a modest house or condo in some cities, because of rampant price inflation. For many buyers in pricey regions like California, for example, securing jumbo financing was a significant and expensive obstacle in the path to home ownership. The National Association of Realtors reports that a median priced home in San Francisco, for instance, costs around $780,000. In San Jose the number jumps to a whopping $850,000 and makes New York's median price of $525,000 look like a steal. In fact, approximately half of all the homes sold in those regions where the cost of living is especially high qualify for jumbo loans and – until now – were ineligible for much cheaper conventional financing.
Of course the news does not just favor buyers, because those home sellers asking high prices can now look forward to an increased demand with better sales price support. Take, for instance, South Florida's condo market, where about 75 percent or more of the high-end condo properties now qualify for conventional FHA-compliant mortgages. The sudden shift in market dynamics happened overnight with the change in government mortgage guidelines. Those who had the foresight to buy earlier this year woke up to higher equity that automatically and effortlessly landed in their laps.
Today's business headlines are consumed with doom and gloom about the housing markets. But the sensationalism overshadows the fact that great buys are available, in all price ranges, including homes in the most desirable locations in the USA. All of these new federal limits effectively lower the borrowing costs of jumbo loans and will stay in effect through the end of the year, making 2008 one of the best times in recent history to buy or sell a higher priced home. After that time they will be reviewed, and will hopefully be extended.
For more information, visit: http://www.GayRealEstate.com
Jeff Hammerberg, President
Toll-Free: 1-888-420-MOVE (6683)
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