TightBuyer, Home Buyer in Fremont, CA

Jumbo Loans in Bay Area?

Asked by TightBuyer, Fremont, CA Mon Dec 1, 2008

My understanding is that the upper limit for a conforming loan in the bay area is 729000. This limit is expected to expire on Dec 31, 2008.

Can a mortgage professional (*not a realtor*) answer the following:
1. Is this limit expected to be extended, when and for how long?
2. Can I lock in rates on a conforming loan for bay area (e.g. 700,000) for 60 days and expect to get a loan at conforming rates if I purchase a house during that time
3. Are there mortgage calculators that will take this changed limit into account?
4. Can you recommend some of the best calculators available on the internet?
5. What are your thoughts about the calculator on zillow?
6. Do you do business in east bay?

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Steven Ornel…, Agent, Fremont, CA
Mon Dec 1, 2008
Hi "TB", besides being a Realtor I'm also a Mortgage Banker and I just wanted to add to what Gabe has provided:

1. With the exception of three high-cost areas (all in Hawaii), the maximum conforming loan limit is $625,500 in the US. If you to: https://entp.hud.gov/idapp/html/hicostlook.cfm you can pull up conforming loan limits by County in CA for 2009. Be sure to select "CY2009" in the "Limit Year" pull-down.

2. Gabe is correct, but make sure you know the funding cut-off date of any lenders still honoring the temporary higher limits that expire at the end of the year. I know that for all of my investors the funding cut-off is 12/15/08.

3. I have a basic Excel spreadsheet you can have if you like. Or, if there's something else you are looking to achieve as far as analysis I probably have that too. Just shoot me an email offline if you are interested.

4. This one's not bad: http://www.jeacle.ie/mortgage/

5. I think the one above is better, and/or I know I have better spreadsheets.

6. My Banking office is in Walnut Creek, but I work from Fremont.

Depending on your situation, another loan option you might consider is FHA. FHA financing allows for only a 3% downpayment until the end of this year, starting in 2009 this will go to 3.5%. Max loan limit for many Bay Area counties will be $625,000. FHA also allows for up to 6% in Seller credits (traditional financing caps this at 3%), which I have successfully negotiated on all my REO purchases this year. We have used much of the Seller credit to buy down the loan interest rate. The "downside" to the FHA option is that you will have a PMI payment, but then again, from a purely financial perspective, it does not make much sense to be putting money down on an asset that will likely go down in value over the next quarter - or longer. You might as well keep your cash in the bank earning interest. You can always pay down your loan balance later.

Here's something else to consider:
On 11/25/08 the Federal Reserve announced it will purchase up to $500 billion in mortgage backed securities that have been backed by Fannie/Freddie, and their step-sister Ginnie Mae, along with buying another $100 billion in direct debt issued by those entities. The fact that they will now buy mortgage-backed securities is HUGE. As a Realtor and Mortgage Banker I can tell you that this announcement is SIGNIFICANTLY reducing mortgage rates immediately! Lower rates coupled with modification programs will be a direct help to housing, one of the main areas of economic weakness, by reducing the rate of foreclosures. Before this announcement mortgage rates were artificially high, showing historically wide yield gaps from US Treasury Bonds, because Investors did not trust banks, banks didn't trust borrowers, and mortgage companies didn't trust homebuyers. With the new Fed guarantees the “health” of these interdependent relationships will improve mortgage rates.

Best Regards,

Steven A. Ornellas, GRI, ABR, e-PRO, CMPS, RE Masters, MBA
REALTOR® / Mortgage Banker-Broker / Certified Mortgage Planning Specialist

Steven Anthony Real Estate & Financial Services
Expect Excellence. Get What You Expect.â„¢
Cell: 510.461.6011
http://www.Steven-Anthony.com SteveO@Steven-Anthony.com
0 votes
The Hagley G…, Agent, Pleasanton, CA
Mon Dec 1, 2008
Linda Grassi is a very experienced mortgahe broker with 20+ years of experience.....give her a call...she can help you!
Web Reference:  http://www.cindihagley.com
0 votes
Gabe Bodner, Agent, San Francisco, CA
Mon Dec 1, 2008
Dear TightBuyer-

Your question is a very good question given the state of the lending environment today. Here are the answers to your questions:

1. The loan limit for conforming loans is $625,500 (in high cost areas) starting Jan 1, 2009. These loan options are available today from many lenders.

2. The loan limit of $729,750 expires at the end of this year and most lenders have already stopped taking loan applications for this loan limit. If you can still get a loan under this, you must close escrow before 12/31/2008.

3. On my website there is a mortgage calculator but it will simply calculate a mortgage payment based on a loan amount and interest rate. The loan calculators are still using $417K as a conforming loan limit because that is still considered the conforming limit in most parts of the country. It is only in high-cost areas has the limit been pushed to $625,500.

4. You can certainly use my website which has many mortgage calculators, http://www.BayAreaHomeFinancing.com.

5. I personally believe zillow has only marginal info. The home values are not very accurate because it does not take into consideration condition or age when comparing properties. I am not sure of any of the mortgage calculators however.

6. Yes I do business in the east bay and I would be happy to assist you.

Additionally, there are still loan options available for loans over the conforming loan limit. However, it does require 20-30% as a down payment in most cases. I hope this information helps you.
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