The New Loan Conforming Limits and How to Finance in Today's market

We now have the new loan conforming limits. For LA County it will be $710,000 and $729,750 max amount.

What does this mean?

It means those homeowners who had loan amounts between $417,001 and $710,000 will now be considered comforming pricing instead of jumbo pricing. Today the difference has been anywhere from 1% to 1.5% on the interest rates.

Suprisingly the rates have not gone down. Unemployment is low, manufacturing is high, consumer confidence has not gone down, and signs have recently been pointing to inflation.

Tomorrow, Friday, should be a very interesting day. The Labor Department will release February’s Employment report. The best formula for the bond market and mortgage rates would be an increase in the unemployment rate, a large dip in payrolls and little or no increase in earnings. Current forecasts are calling for 0.1% increase in the unemployment rate to 5.0% and approximately 25,000 new jobs added. It will be a big day for mortgage rates tomorrow. If you are currently trying to refinance or purchase, you might want to contact your agent to find out if they can still get you the rate they promised or get you a lower one.

The loan guidelines between conforming and jumbo aren't much different because of the recent mortgage implode we have been experiencing. It is still challenging to get a home loan approved compared to 2 years ago. I still originate loans, but not a lot lately because this market is not demanding loans as much as it did before. Getting loans approved today is like driving a VW bug to Mexico with an elephant sitting shotgun.

This year there will be a lot of creative financing that will not include the lenders. The banks are too busy handling their default departments. Loan origination is still important for them, but they do not want any flexible demanding borrowers.

If you are a seller, have plenty of equity, and would like to sell; your best bet is to sell low or create a lease option to buy.

For those sellers who have a property that is free and clear, it is a great opportunity for you to become the lender by preparing a seller financing contract with your buyer. If the buyer defaults, you will own the property again. Why not make 6 to 9% of interest on your equity during these hard times? Makes all good sense. Remember to always consult with your attorney and CPA about these types of transactions.

Lately I have been learning a lot from a veteran real estate investor....something I've been wanting to do for a while now. I have been gaining great knowledge about getting through this market, and his plans go hand in hand with mine. I am very excited to share this with all my friends. Let's talk about it over a cup of coffee.