Fannie Mae releases guidelines for the temporary increase in the conforming loan limit.

We may have a breakthrough... Fannie Mae has announced the timing of when they will be buying the new "Jumbo-Conforming Loans" as they are now calling loans between $417,000 and the increased limit of $729,750.  Fixed rate loans origninated after March 1, 2008 will be eligible for underwriting beginning April 1, 2008.  Fixed-adjustable loans, like  5/1 and 7/1 ARMs will be eligible begining May 1, 2008.

According to Fanne Mae's most recent update, they will have different (more stringent) guidelines for "Jumbo-Conforming Loans".  This does not come as a huge surprise.  It may, however, limit the number of people who will benefit.

"Jumbo-Conforming Loans", those between $417,000 and  $729,750 are subject to the following restrictions:

• Only 1 unit properties (no 2-plex, 3-plex, or 4-plex).
• When purchasing a new property:
  •  the minimum down payment is 10% with a 700 FICO score for fixed rate loans.
  •  the minimum down payment is 20% with a 660 FICO socre for a 5/1 ARM.
• When refinancing, no cash out is allowed.
• On a second home or investment property, a minimum of 40% down payment is required.
• Consolidating a first mortgage and a second mortgage is not allowed.
• Refinancing with 6 months of a purchase is not allowed (You must have owned the property for at least 6 months before you can refinance the mortgage into a "Jumbo-Conforming Loan").

Overall, these new guidelines will help some people get into a better mortgage at a lower rate.  Now may be a good time to do a "Mortgage Check-Up" to see if you could benefit from these changes. 

This information was provided by Stern Mortgage. For additional information contact Stern Mortgage Company at 650-322-7277