Reuters reports that Denise Dunckel, a spokes person for the FHFA recently stated “a gradual reduction in loan limits is an appropriate and effective approach to reducing taxpayer’s mortgage risk exposure”.
Conforming loan limits for a single family dwelling are currently $417,000. Some counties that are considered “high cost” have a higher loan limit (referred to as “conforming high balance”). King, Pierce and Snohomish counties have a conforming loan limit of $506,000 for a single family dwelling through the end of this year. Here are the 2013 conforming loan limits for Washington state.
Conforming high balance loan limits were introduced in 2008 and were intended to be temporary. At one point, conforming high balance loan limits in the greater Seattle area were up to $567,500 and were reduced back to $506,000 in 2011. (FHA’s single family loan limit for King, Pierce and Snohomish county remains at $567,500 through 2013). The roll-back in 2011 meant that borrowers with loan amounts greater than $506,000 were now in “jumbo” non-conforming territory if they wanted to refinance their existing mortgage or buy a home.
Should loan amounts be rolled back again for 2014, borrowers who were once conforming high balance may also find themselves dealing with jumbo rates (which are currently essentially the same as conforming high balance rates). Click here for a rate quote for homes located in Washington state.
The bigger issue is that these borrowers will be dealing with jumbo/non-conforming guidelines which require a larger down payment and higher credit scores.
If you currently have a conforming high balance mortgage or are considering one, you should contact your local mortgage professional to see what your options are for refinancing or buying a home. You may just have a couple months remaining where our current loan limits of $506,000 for greater Seattle are an option.
I’ll be posting the 2014 conforming loan limits as soon as they’re available. If you want to stay informed of what’s going on in the mortgage world, subscribe to my blog in the upper right corner.