Remember the Economic Stimulus Act of 2008? That was not put in place forever – only for 2008 (as the title would suggest.) Congress authorized temporary increases to the conforming loan limit ($417,000) in high cost regions – like ours – mortgages as large as $729,750 are considered “conforming.” This has been welcomed news to buyers in our area. While I hate to look a “gift horse in the mouth,” it’s still not a lot of money. If you look at it this way…many homes in our South Bay neighborhoods are $1 million. If an average buyer (honestly not average buyer when they are buying a million dollar house – I’d personally call this above-average) has 20% to put down ($200,000) they still need an $800,00 loan – this still exceeds the $729,750 loan limit for what would be considered “conforming.” It’s still not enough. The buyers today need to come in with more down, up to 30% to make a lot of deals work. The sad news is that like I said above, this is the loan limit for 2008 – that means that it ends Dec 31st, 2008. Starting January 1st, 2009 the conforming loan limits for our high cost areas will be capped at $625,500. That is not good news if you ask me. If you are a buyer right now with the where-with-all to qualify and obtain a loan…..then you better hurry! Now is the time!
