High Conforming Loan Limits Reduced in NY in Oct.
A few years ago during the financial credit meltdown Congress raised the limits on conforming loans in expensive housing markets like NYC (Manhattan) as a temporary emergency.
Currently the “temporary” limit on these loans is $729,750. This means that if you put 20% down on a $900,000 home, you can get a conforming loan in the amount of $720,000.
Effective October 1, 2011 this temporary legislation expires and is not expected to be extended. In October The amount will be lowered to $625,500 for a High Balance Conforming Loan.
So, what does that mean to Manhattan buyers? If you buy the same $900,000 home and put 20% down, your loan will now be considered a Jumbo loan. Rates on Jumbo loans are typically 1-1.5% higher, so if today you could get that loan today at 5% your payment would be $3865.12. The same loan amount using the Jumbo rates would be 6-6.5%, bringing your payment to $4550.89.
Over 30 years, that totals over $246,000! The other option would be to put a larger down payment on the property, to the tune of nearly $100,000.
If you've been thinking about buying and selling (sellers will be effected by less qualified buyers) Now is the time to buy and sell in Manhattan. It will cost you more in October. About $100,000 more.
Currently the “temporary” limit on these loans is $729,750. This means that if you put 20% down on a $900,000 home, you can get a conforming loan in the amount of $720,000.
Effective October 1, 2011 this temporary legislation expires and is not expected to be extended. In October The amount will be lowered to $625,500 for a High Balance Conforming Loan.
So, what does that mean to Manhattan buyers? If you buy the same $900,000 home and put 20% down, your loan will now be considered a Jumbo loan. Rates on Jumbo loans are typically 1-1.5% higher, so if today you could get that loan today at 5% your payment would be $3865.12. The same loan amount using the Jumbo rates would be 6-6.5%, bringing your payment to $4550.89.
Over 30 years, that totals over $246,000! The other option would be to put a larger down payment on the property, to the tune of nearly $100,000.
If you've been thinking about buying and selling (sellers will be effected by less qualified buyers) Now is the time to buy and sell in Manhattan. It will cost you more in October. About $100,000 more.
High Comforting loan limit have been reduced. Know more from the post
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