Some Good News for Buyers and Sellers on Long Island! Freddie Mac and Fannie Mae once again have increased the higher loan limits allowed for conforming loans. The mortgage rates on bigger mortgages finally should come down. Home loans up to $729,750 for single-family homes (Nassau and Suffolk qualify for the maximum limit) should be cheaper in the next few weeks. This higher conforming loan limit is part of the economic stimulus act and is available only until the end of this year and then reverts back to the $417,000 true-conforming loan limit. Freddie Mac and Fannie Mae can purchase or guarantee only conforming-loans-anything over the limit is a Jumbo Loan-and the interest rates are much higher. The interest rates for these super-conforming loans may be slightly higher than the true-conforming $417,000 limit (typically one-fourth to one-third percentage point higher) – but they still are cheaper than Jumbo loans-which average around 1 to 1 ½ points higher than conventional mortgages.
Even though the act passed in February, the criteria for these new limits were released only recently and both Freddie Mac and Fannie Mae will begin buying super-conforming loans on May 4. Check with your mortgage officer to see when their company will start writing these loans. (See How Much Can I Afford? for names of some mortgage lenders.) This higher loan limit and resulting lower interest rates for mortgages up to $729,750 certainly will have a positive impact on the Dix Hills & Melville Housing Market. Good news indeed!