FHA RAISES THEIR LIMIT TO $725,000

As part of the congressional rebate program to stimulate the economy, FHA will now insure mortgage loans up to $725,000. However, I'm betting that amount will only be good in limited markets such as New York City, Chicago Metro area, San Francisco, San Diego and possibly Miami.

Our Naperville area had/has conventional limits of $417,000. Anything higher than that is considered a jumbo loan with higher rates. Those rates have been as high as 1% over the conventional rate in the past six months.

What will this accomplish? It will probably help those buyers who are looking to buy property under $650,000. It should enable them to get a lower rate and/or qualify for a more expensive home. It should help the builders who have been sitting with unsold inventory. It should also help that enormous backlog of inventory that we've had sitting.

Will this all happen today? Nope. It generally takes six months for a FED rate cut to get into the economy. So, I think that during the summer we'll start seeing more active buying.

At least, we may be seeing the light at the end of the tunnel.