Who Gets The Goodies?

by Peter G. Miller
March 4th, 2008
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The idea of rising loan limits has real consequences for buyers, sellers and lenders. If someone is at the cusp of the old limits and can finance under the new standards they can save thousands of dollars over the life of the loan. For FHA borrowers, the increase in the top FHA mortgage amount from $362,790 to $729,750 doubles the amount of financing available under the program — at least for 2008, an election year.

Michael posted with us and says: “My wife and I plan on closing a home mortgage on the 14th of this month and we are in the same position waiting on the increase for just an additional $15,000 increase. Our home inspection will be done this Friday. Then we’ve heard it takes about exactly a week thereafter for the appraisal to come back and if all this is true we should be able to get into the home we want without having to come up with an additional $6,000 to get the house we want. Other than that the only thing we can do is prolong the closing date and hopefully don’t miss out on the deal.”

Joe responded with an interesting way to engineer a larger loan:

“You must discuss this with whoever is accomplishing the loan for you. If your rate was already locked as a jumbo, that can potentially become a problem with the lender who locked it. If that is the case and you have them appraise your home, that appraisal may not be transferable. So to avoid any conflict, have your current loan officer/lender put something in writing that states - when the loan limit increase is executed, you will be able to receive the lower conforming rate.”

I read this exchange and had two thoughts:

First, for lenders out there, does Joe’s approach work? Would you agree to the type of language suggested by Joe? Is there a better way to prepare for new and larger loans?

Second, how much of the lower rates associated with super-jumbo loans will be passed through to borrowers? Or, will it be like an auto sale with some lenders, something similar to a situation where the manufacturer offers a rebate but the car buyer has to battle the dealership to get the benefit?

Tell us what you think.

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This entry was posted on Tuesday, March 4th, 2008 at 3:16 pm and is filed under . You can follow any responses to this entry through the RSS 2.0 feed. You can skip to the end and leave a response. Pinging is currently not allowed.

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