Bigger Loans, Bigger Buyers!

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Prospective homeowners rejoice: conventional loan limits have been raised. Homeowners on the coasts should be especially excited, where the median price of homes often far exceeds the traditional $417,000 limit on loans.

If you were unaware, home buyers who needed loans for more than $417,000 would previously need to obtain a “jumbo” loan, with matching jumbo interest rates and monthly payments. This new law would now allow homeowners to take out bigger mortgages without knuckle-biting, arm-twisting interest payments each month. This should also stimulate the markets in high-end locations with home prices above this range.

Peter Miller of RealtyTimes.com has a different perspective on higher loan limits:
“To have jumbo mortgages–there must be investors who buy mortgage-backed securities. If securities buyers…don’t purchase mortgages with bigger loan limits, then it doesn’t matter what Washington wants. Without investors, super-jumbo loans simply won’t be available…regardless of what the rules say.”

Money doesn’t come from trees; it comes from big, wealthy foreign investors. If they aren’t willing to take on a high-risk mortgage, then Congress’s move won’t do much for the housing market. With two sides to every story, it will be a true test to see if the housing market is uplifted by this move, or if the popped housing bubble will remain stagnant.

What do you think?

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3 Comments

  1. Having your own vehicle is a necessity nowadays. If you fail to manage the required amount at your own then loan is the only option left for you. But most of the lending organizations impose heavy processing fees even while they promise a low interest. In such circumstances you need a reliable resource that offers low interest rates in true sense. Cheap auto loans are the best choice in this category. To find easy auto loans, poor credit auto loans visit http://www.universalautoloans.com

  2. Rick Marnon, Novi on

    I agree with Sam. We have a similar problem here in Novi Michigan. There are too many high end homes on the market. We need to get all of the housing market moving, and fast.

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