The Housing Bill, recently introduced last month was written with struggling borrowers in mind. The average home buyer will see the bill representing a mixture of good and bad.
This law could help keep interest rates lower, but the increase in the ‘conforming’ loan limit, from $417,000 to $625,000 it is hoped will prove to be more impacting. The conforming limit is the threshold above which homebuyers cannot buy loans from lenders.
The conforming limit is also known as the ‘jumbo’ limit for a variety of reasons, interest rates for jumbo loans have generally been one percentage point higher, than for those for non-jumbo loans.
For first-time buyers the jumbo loan threshold is especially important in high-cost areas. While the increase in the conforming limit is generally received, home buyers living in high-cost regions would have welcomed an upper limit of $700,000.
In practical terms the bill means anyone considering a mortgage above $625,000, should secure it before the end of the year. Otherwise they face the risk of an interest rate rise of at least one percentage point.
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