Today we received news that the conforming loan limit will remain at $417,000 throughout 2008. Now, there are some areas whose conforming loan amounts will be larger than the national $417,000 benchmark. In most areas the conforming loan limit is determined by 125% of the median sales price. For those areas where $417,000 in not reached by this calculation the expressed limit is imposed.
To backtrack real quick, any loan amount over $417,000 is classified as a Jumbo loan. For the last year Jumbo loan money has gotten pretty expensive, to the tune of around 8% vs. around 6% (avg.) for loans at the $417,000 limit and under. It is vital that clients understand this limit and the increased rate for exceeding $417,000.
Despite all of the other wild news in the banking and mortgage industry, this did not come as a surprise. Actually this is a some welcome stable news in a year that has been anything but volitale.
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