Recent congressional legislation paved the way for increasing the limits for conforming loans (loans available at standard residential rates which are lower than jumbo loans). This will allow existing property owners that purchased property with a higher cost second mortgage to refinance into a single standard loan program and new buyers to save money when they purchase a property above the previous limit of $417K which is pretty small in Steamboat where the current average single family home is worth close to $1 million dollars. This change is expected to just increase the ceiling for normal loan programs but we haven't seen pricing from lenders to confirm that given the revised limits just came out. If it works are expected this will help make loans up to $675K for single unit homes more affordable and that will help a lot of people who already own or are buying homes in the Steamboat Springs, CO area. Jumbo loans currently cost about 0.75 to 1 points more (the spread) than conforming loans since lenders classify larger loans like a risky loan even though most are less risky than the average conforming loan given the creditworthiness and increased resources most jumbo buyers have going for them . The new limit for 2 unit homes is now $864.1K which will help owners of duplexes.
Many holders of properties with loans over $417K were not able to take advantage of lower rates available recently because of this spread kept jumbo rates above what they had before. The spread is larger than before so there was little if any savings available. compared to conventional loans that could often be refinanced for a savings of 0.5-1%. For more click back to the Steamboat Springs blog main page or give me a call at 970-819-6930.
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