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Here’s what “My Mortgage Guy” has to say about the lending market and the new limits from Fannie Mae and Freddie Mac in this months edition…

Mortgage rates continue to hover near their lowest levels of 2011.  Investors seem to be shrugging off the European debt crisis and the government debt ceiling debate.  Stocks continue to trade in a range after recovering from a 6-week losing streak back in June.

Last week, Fed Chairman, Ben Bernanke was on Capitol Hill to discuss the US economy and within his speech hinted the FED would be willing to further stimulate the US economy if necessary.  Stocks rallied on the news.  One would have to assume continued government stimulus will eventually lead to inflation and likely higher rates, making today’s historic low mortgage rates look like a bargain.

Fannie Mae and Freddie Mac established “temporary” high-cost loan limits in 2009 to help the housing market in higher cost areas (like California).  The higher loan limits allowed Fannie Mae to absorb a larger part of the JUMBO financing market at a time when other lenders were not willing to lend money.

The temporary loan limit ($697,500 in San Diego County and $729,750 for LA, Orange and San Francisco) is set to expire on 9/30/2011.  The proposed reduction in loan limit would reduce the maximum loan limit in San Diego to $546,250 from the current $697,500 level (a reduction of $151,250).

Lenders are preparing for the anticipated change but the reduction will likely increase the amount of required down-payment in the JUMBO market and the FHA 3.5% down-payment option up to $700,000 will no longer be available.  It could negatively impact homes priced between $650,000 and $875,000 in the higher cost areas.  Click Here to See the impact per county.

I would love to see the temporary loan limit extended again but the government has not made many good decisions regarding housing over the past 6 years…

If you are thinking of buying a new home, your timing could be great.  It is certainly a better time to buy than at any point in the previous 8 years.  If you already own your home and you have a mortgage rate above 5.00%, there is still an opportunity for you to refinance your loan below 5.00% with little or NO CLOSING COSTS.

Why not pay yourself instead of giving more money to the bank?  Take advantage of today’s historic low rates!

Give Kurt at call at 858-657-1063 or kurt@wjbradley.com