Ed's Blog

Here are a few quick updates for you. Feel free to call for more details.

1) Fed Lowers Short Term Rates-Mortgage Rates Rise! Huh?! In what’s becoming a common occurrence lately, when the Fed lowered the discount rate this week, long term rates, including mortgage rates, actually rose! Go figure. Bond investors are now fearing inflation while we’re just hoping to keep our heads above water! If you’d like to know more about this common phenomenon, give me a call.

2) Reminder- Conforming Jumbo Loan Limits To Fall Soon. Just another reminder that conforming jumbo loans will retreat from the current high of $729,750 to $625,000 effective 1/1/2009. However, most lenders will stop accepting applications for these loans sometime in mid to late November, depending on the lender. That’s so they’ll have time to close the loans before the end of the year.

3) Trailing House Syndrome- Ugh! We’re currently working on a transaction that highlights a potential pitfall in deals you may be working on. If a buyer wishes to buy a new primary residence and rent out his or her current one, the rental income can only be counted to qualify for a conforming, conforming jumbo, or FHA loan if the current home has 30% equity based on a current appraisal! This can be a deal killer in some cases, so watch out! This rule was enacted because many people who were upside down in their current homes were buying new homes and then walking away from their old ones and letting lenders foreclose.