Nov. 25, 2008 - The shrinking jumbo mortgage

Time draws short for higher limits

Loans that can be purchased and guaranteed by Fannie and Freddie, called conforming loans, are cheaper than loans that cannot. Loans that exceed the conforming-loan limit are called jumbo loans.

Begining Jan. 1, 2009 the biggest loan on a single-family home that can be purchased by Fannie Mae and Freddie Mac falls to $625,500 from $729,750 in certain high-cost areas including Somerset and Middlesex counties, here in New Jersey.

In July, Congress made the law permanent but changed the formula starting in 2009 to 115 percent of each area's median home price, with a floor set by the government and a ceiling equal to 150 percent of the floor. The Federal Housing Finance Agency said the floor would remain at $417,000 for 2009, which pegged the ceiling at $625,500.

According to Bankrate.com, time is of the essence because it takes a few weeks not only to process a loan from application to closing, but to sell it on the secondary market after closing. At this late date, it's better to skip the middleman and apply directly with a lender instead of through a mortgage broker.

  State                               County                               2008 Maximum            2009 Maximum

New Jersey	Atlantic	$453,750	$417,000
New Jersey	Bergen	$729,750	$625,500
New Jersey	Burlington	$420,000	$417,000
New Jersey	Camden	$420,000	$417,000
New Jersey	Cape May	$487,500	$417,000
New Jersey	Essex	$729,750	$625,500
New Jersey	Gloucester	$420,000	$417,000
New Jersey	Hudson	$729,750	$625,500
New Jersey	Hunterdon	$729,750	$625,500
New Jersey	Mercer	$440,000	$417,000
New Jersey	Middlesex	$729,750	$625,500
New Jersey	Monmouth	$729,750	$625,500
New Jersey	Morris	$729,750	$625,500
New Jersey	Ocean	$729,750	$625,500
New Jersey	Passaic	$729,750	$625,500
New Jersey	Salem	$420,000	$417,000
New Jersey	Somerset	$729,750	$625,500
New Jersey	Sussex	$729,750	$625,500
New Jersey	Union	$729,750	$625,500