Conforming loan limits and their affects in Oakland and Berkeley Hills real estate

Loan amounts fall into two main categories, Conforming and Jumbo.   Conforming loans have a limit up to $729k.  Jumbo loans are all loans over $729k.  Until recently the Conforming loan amount was all the way down in the $400’s.  As an economic stimulus the Congress temporarily increased the Conforming loan limit to $729 through January 1, 2009.  After 1/1/09 the NEW Conforming loan limit reduces to $625,500.  Loans above that amount will then be considered JUMBO’s.

Why does any of this matter to you?  Well, Jumbo loans typically come with higher interest rates.  And with the price of homes in the Oakland Hills, Berkeley and Piedmont it will pretty much apply to everyone.  For example:  If you were considering purchasing a home for $925k and you have a 20% down payment ($185k,) then your loan amount would be $740k.  If you close that deal before 1/1/09 then your loan would be considered a Conforming loan.  At that same loan amount and closing on the home after 1/1/09 you’ll have a Jumbo loan.  The .75% difference in the interest rates of Jumbo vs. Conforming loans amounts to a monthly payment difference of over $460 for the same loan amount.
The moral to the story?  If you are considering buying or selling a home between in the range of $800 to $930, with the average 20% down, you may want to make the move before January 1st.  If you are an all cash buyer, you may have a window of buying opportunity in the near future.

If you’re interested in watching what loan rates are doing I suggest bookmarking: www.bankrate.com

If your thinking about buying or selling real estate in Oakland, Berkeley or Piedmont CA., Brian Santilena is a Realtor and Real Estate Agent Serving those communities since 1997.  Properties and homes for sale in all price ranges and styles.  Condos, view homes, Montclair Traditionals or Rockridge Craftsmans.