In 2008 Congress raised the limit on nonconforming mortgages to as high as $729,750 as the private market froze and financing for larger mortgages became unavailable.Â Â Unless Congress acts, we will soon face an ill-timed test of the strength of the nationâ€™s housing market and private mortgage finance system.
On October 1st the limits will expire and drop from $729,950 to $625,500 in the most expensive areas, mostly affecting the East and West Coasts.Â Arizonaâ€™s nonconforming loan limit will remain at $417,000.
According to Standard & Poorâ€™s, there are around 110,000 nonconforming mortgages in the nation between $625,000 and $729,000 â€“ about 2% of total jumbos.Â Although, this change will affect only a very small segment of the overall housing market these loan-limit changes will likely add additional downward pressure on prices for, at least, a small part of the housing market.
Many borrowers who were able to get loans backed by Fannie and Freddie will now have to look for â€œjumboâ€ loans. But these typically come with higher down payment requirements, strict underwriting standards and higher interest rates. Some potential buyers will inevitably be shut out of the market.Â In Maricopa County, the FHA loan limit is currently $346,250.Â If congress does not act to extend it, the FHA limit will drop to $271,050 on October 1, a difference of $75,200.Search homes inÂ Scottsdale,Â Paradise Valley,Â CarefreeÂ andÂ Cave CreekÂ that fit every lifestyle! Â Sign up free, save your favorites and receive personalized email updates. If you have a question or would like to schedule to tour any homes, give me a call. I would welcome the opportunity of assisting you with your next move when you are ready to proceed!