Ed's Blog

We all know by now that the Economic Stimulus Package has been signed into law. After all of the hoopla surrounding the approval of this package -which will raise the conforming loan limits in many areas in California to just under $730K- it’s become clear that many homeowners and buyers feel that the plan was a whole lot of talk, and no action.

It’s understandable that many people feel this way, so I wanted to clarify what is currently taking place as a result of this new plan. Rest assured, the benefits are on the horizon, we just have to be a little patient.

Here’s What We Are Waiting For:

· The median home prices in each geographic area need to be determined, so as to accurately determine the conforming loan limit for each area (also known as MSA or Metropolitan Statistical Area.) HUD has until March 14, 2008 to make these determinations. This is no easy feat, as home values are declining in many markets, so trying to ascertain the correct median home value for an MSA is an enormous undertaking. Once this is published, the new conforming limits for each MSA can be calculated.

· Once the limits for each MSA are determined, interest rates need to be determined. The expectation is that the rates for new conforming loans will likely be less than current “jumbo” rates, but may be slightly higher than rates for loans under $417K. We’ll just have to wait and see.

Here’s A Glimpse of What’s To Come:

· By July, we can expect to see all of the new loan limits in place, and lenders approving applications that meet the guidelines. (This could happen sooner, but don’t hold your breath!)

· The increase in the conforming limits will be temporary. The current thinking is that the temporary increase will only last through the end of 2008 and will not be extended. But stand by on this issue.

Here’s What You Should Do Now To Get Ready:

· Start compiling your loan application paperwork. Lenders, underwriters and brokers are going to get VERY busy, as soon as the aforementioned changes take place. You ought to spend time now getting ready to submit your application, so you can apply for your loan the minute the new limits are in place.

· Check your credit (or have us do it for you.) It’s amazing what a difference cleaning up your credit can do. Confirm that there are no inaccuracies on your report, or ask us for help in removing damaging items from your report. This will improve your chances of being approved for a loan.

· Call us today! We’ll provide you with a loan application check list, referrals for appraisers and tips to make sure you make the most of the opportunity that is about to present itself.

With legislators showing a united front in their efforts to help homeowners and buyers, it’s now just a matter of being ready and patient, and before you know it, you’ll be off and running towards a new home purchase, or a money saving refinance.