We’ve been hesitant to comment on the economic stimulus plan until all of the cards fell into place.
Now that the stimulus package has been signed by President Bush, the lending industry will get a much needed infusion of cash.
For the Peninsula, by far the most stimuli will come from the provision which raises the conforming loan cap. Fannie Mae and Freddie Mac are government sponsored companies which back home mortgages. Until now, the largest loan they would dish out was $417,000. That did little good on the Peninsula where the median price is closer to $900,000. Being able to sell these new larger loans to Wall Street as government backed securities means rates will be lower.
It’s a bit tricky as to what the new cap will be, since it will be indexed to your local median home price, but the conforming cap should be raised to $729,750 on the Peninsula.
WHEN WILL THESE NEW UPPER LIMITS BE AVAILABLE?
Optimists say in about a month from now (April 2008) but don’t hold your breath.
PLAY YOUR CARDS RIGHT AND ACT FAST.
If your current loan is less than $729,750 and more than $417,000 you could directly benefit from the new conforming cap but you only have until December 31st of this year to refinance your home. That means there will be about an eight month window of opportunity.
WATCH THE LENDING INDUSTRY SCRAMBLE.
Since the program is supposed to end in December, it’ll be a mad dash to get all of those loans refinanced. Lenders will have to staff up, Title companies will have to re-hire many of those recently let go due to waning home sales and appraisers will begin raising their fees again.
Fence-sitting first time home buyers will no doubt see the window of opportunity to purchase since the same home will now carry a lower monthly payment and home values have softened for the first time in years.
There will be a whirlwind of activity until the end of the yearâ€”it should be quite, shall we say, "stimulating"â€¦