Yesterday the US Senate passed an expanded version of HR 5140 an economic stimulus package that includes a temporary increase in the conforming loan limits from $417,000 to as high as $729,750 in high cost areas.
So, how do you know whether you are in the "high cost areas"?
1. You must know the formula. If 125% of the local area median home price exceeds $417,000, the temporary loan limit would be that 125% of the median home price with a cap of $729,750.
2. You must know the median home price in your area. According to HR 5140, the Secretary of Housing and Urban Development will publish the median house prices within 30 days. In the meantime, you can check the Wall Street Journal who had published median house prices recently, and you can reference this information to get an idea of which areas will exceed the $417,000 limit.
What does all mean to you? Well, if you currently have a mortgage with a balance between $417K and $729,750, depending on where you are located, you can potentially refinance your mortgage into a conforming loan. Why is that interesting? Well, because the spread in rates between a conforming and jumbo loan is about 1.25%. For some folks, this can mean huge savings in their monthly mortgage payments.
Call or email me for a free mortgage review to determine how this new law that's about to pass can pontially benefit you.
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