On Thursday of last week, President Bush announced the new Federal Stimulus Package.  In a market that sort of needs a bone thrown, government is trying to step in and do what they can.  The package includes mortgage reform targeted at pushing more liquidity into the real estate market. 

In the spirit of being an educator, it would be timely to first provide a quick update on the current limits.  So, right now the maximum conforming loan amount is 417,000.  This limit is determined by Fannie Mae and Freddie Mac and re-evaluated every year based on changes in the mean home price from October to October.  When it changes, normally it doesn’t change much.  The other interesting fact on this subject is the ‘high cost areas’ such as Alaska, Hawaii, Virgin Islands and Guam are 50% higher.  The reasoning is because the median purchase price is extremely higher than it is in other parts of the country.

Ok – So, the stimulus package is intended to make more money available at a lower cost to more consumers.  The proposal suggests an increase the loan limits for Fannie Mae and Freddie Mac for one year to $729,750.  The package also suggests to increase the FHA limits to $729,750 from $362,000.

As you may have read or heard in the news, Bush is pushing to get his economic stimulus package passed as quickly as possible.  Plan on seeing this fast tracked and implemented between Valentines Day and St. Patrick’s day (Just my guess at it, and others are saying it too).

So far, the package has been agreed upon by Democratic and Republican House Leaders and the Bush Administration.  I’ll keep you posted as things move forward.

If you currently have a jumbo loan (loans over $417,000), keep your eyes peeled for this change.  You could potentially lower your rate, especially considering this volatile mortgage rate market.  If you miss a rate by an hour, it could cost you thousands of dollars.  If you don’t have someone currently managing your mortgage (actively, with a system), please give me a call.  I’d be glad to help! 

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tyler@iowamtg.com