If you want to buy real estate in the Hollywood Riviera, Redondo Beach, Torrance, Palos Verdes Estates or any other city in Los Angeles County any time soon, keep a close eye on your calendar. Starting October 1, 2011, the temporary conforming loan limit of $729,750 will expire.
· Many lenders are requiring ALL loan applications with loan amounts between $625,000 and $729,750 to be received by Monday, August 1, 2011
· ALL lenders are requiring that loans between $625,000 and $729,750 be funded and dispersed by Friday, September 30, 2011
After September 30, 2011, Los Angeles County, California will face a new, lower conforming loan limit. The temporary, $729,750 conforming loan limits in high-cost areas will be terminated by then.
· Beginning October 1, 2011, loans greater than $625,000 will be considered “JUMBO” loans
A jumbo loan, or a non-conforming loan, is a mortgage loan that does not conform to the guidelines set by Fannie Mae (the Federal National Mortgage Association) or Freddie Mac (the Federal Home Loan Mortgage Corporation). Simply put, it is a loan that exceeds the limit and guidelines that Fannie Mae or Freddie Mac requires for loans they are willing to purchase from the lenders.
· Jumbo loans require stricter lending guidelines and down payment requirements
NOTE: You cannot get a jumbo loan for a second home. Jumbo loans also typically require larger down payments than conforming loans and the interest rates are higher.
