What is a MSA and Do I need to Know anything About it?

Most of know or at lease have an idea that the US is divided between the North and the South, the East and the West, by states, by counties or districts, cities, zip codes, but did you know that we are now divided by MSAs?

What is an MSA (I love acronyms)?  No it is not the Japanese Multi-functional Satellite Augmentation System(MSAS).  MSAs are Metropolitan Statistical Areas.   MSAs are delineated on the basis of a central urbanized area-a contiguous area of relatively high population density. Note that the definition of an MSA has changed over time.  For a current but complete list, which also shows the counties included in each MSA, visit http://www.census.gov/population/www/estimates/metro_general/2006/List1.txt

Why do we need to know anything about a MSA?  Well, if you have been hearing about the stimulus package that President Bush signed, there was verbiage about increasing both the conforming loan limits (currently $417,000) and FHA based on a new formula based on MSAs:  125% of the median home price in an MSA.  If you are purchasing or refinancing a home from July 1st 2008 to December 31st 2008, you might be able to take advantage of lower rates and save some Mula.  I say might because there are still a lot of unanswered questions and not everyone will be able to take advantage of this change.

The new FNMA/FHLMC limit is based on a formula, the new maximum limit ($729,950) will not be a nationwide standard. The new limit will only affect higher cost areas like Los Angeles, San Francisco, but more moderately priced housing markets will have differing limits somewhere between the current $417,000 and the $729,950 max, and some affordable markets may actually see the limit stay the same. The same with FHA: the minimum loan amount ceiling will increase from $200,160 to $271,050, and the maximum loan amount ceiling will increase from $362,750 to $729,950, again depending on housing prices in individual geographic regions. 

You can find AJ Nisen on Active Rain at Contra Costa California Mortgages  or at Bank of America Mortgage