Time is short for some buyers and owners of more expensive homes to get the best terms on mortgage loans. Starting Oct 1st, Fannie Mae and Freddie Mac will cut the size of loans they buy from lenders. That will force many future borrowers into more expensive and harder-to-get jumbo loans.
The Freddie and Fannie limits, which are generally $417,000 for single family homes nationwide, were raised in 2008 in some high-cost housing markets to stimulate the economy. In Yolo county, the limits rose to $580,000 and next month they will fall to $474,950.
Major lenders including Comstock in Davis, Bank of America and Wells Fargo have stopped taking new applications for affected loans so that those in process close by the Oct 1st deadline. With jumbos, borrowers could see a 4.5% interest rate, for example, go to about 5% according to Cara Mengali at Comstock Mortgage in Davis.
The changes will affect 2% of the nation’s homes, but more in some areas. Some buyers may lack needed down payments and others may have to consider less costly homes.
All of the news is not bleak on the housing front. Fixed mortgage rates fell to the lowest levels in six decades. The average rate for the 30-year-fixed fell to 4.12% down from 4.22%, the lowest on records dating to 1971. The average rate on a 15-year-fixed fell to 3.33% from 3.39%.
Please visit my website at www.JohnnyBrooksHomes.com for helpful tips on buying or selling a home and easy access to view all local area homes for sale.