Fremont Bank Investigates Benefits Of Hud’s New Conforming Limits For Homeowners
FREMONT, California - February 25, 2008 -
Fremont Bank, the leading full-service community bank in Northern California, is exploring the benefits for its homeowner clients as it awaits confirmation from the US Department of Housing and Urban Development (HUD) on news related to the recent Economic Stimulus Package that aims to increase conforming and Federal Housing Administration (FHA) loan limits. HUD is scheduled to publish the median house prices and mortgage principle obligation limits for all affected areas early next month on www.hud.gov.
Under the proposed new law, both Fannie Mae and Freddie Mac would also see their loan limits increase. The two firms may purchase home loans of up to 125% of the median home price in an area, up to a national limit of nearly $730,000 from high-cost housing markets until the end of 2008. In California, the current limit is $417,000.
In addition, the floor on FHA limits will be raised so that larger FHA-insured loans would become available in low cost areas. The new limits will apply to 30-year and 15-year fully amortizing, fixed rate mortgages on homes that are owner-occupied.
Potential Benefits For Qualified Fremont Bank Homeowner Clients
Once the new conforming limits are confirmed, Fremont Bank, along with Fannie Mae and Freddie Mac, will provide further details on the limits and implications for its affected clients. Any Fremont Bank client looking to borrow more than $417,000 and up to the new limits should benefit by receiving a less expensive loan. Loans above the limits, referred in the banking industry as jumbo loans, have been harder to obtain and are typically one percentage point higher in interest.
Under the new limits, Fannie Mae, Freddie Mac, and banks such as Fremont Bank could require stricter underwriting standards, such as lower ratios of debt payments to income on loans greater than $417,000. Limitations may also include cash-out features that would limit homeowners from consolidating their first and second mortgage into a new limit loan.
What Kind of Rate Should Fremont Bank Clients Expect?
Exact rates are unclear. As of today (February 25, 2008), Fremont Bank offers an average APR of 6.5 percent—with no closing costs or points—for a traditional fixed loan up to the limit of $417,000. Loans above $417,000 and below the new limits will likely be offered at a similar rate. Mortgage rates change daily and could be higher or lower on all types of loans by the time the increased limits are implemented. |
