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Manhattan (NY) Loan limits increased to $729,750

The House and Senate passed the stimulus package called the "American Recovery and Reinvestment Act of 2009" President Obama is expected to sign the bill tomorrow.

While many real estate professionals and home buyers were hoping for a $15,000 tax credit for all home buyers without income caps that was introduced in the Senate unfortunately the final bill only includes an $8000, tax credit for first time home buyers that earn less than $75,000 per year ($150,000 on a joint return).

  • Individuals with incomes between $75,001 and 94,999 (single) or $150,001 and $169,999 (joint returns) are eligible for a partial tax credit.
  • Individuals with incomes greater than $95,000 (single) or $170,000 (joint return) are not eligible for this tax credit.
The bill includes a return to the higher temporary loan limits put in place for Fannie Mae, Freddie Mac and FHA. during 2008. In 2009 the limits went down to $625,000 for New York.

The bill allows Fannie Mae and Freddie Mac to once again purchase and guarantee loans of up to $729,750 in high-cost areas such as Manhattan. This applies to purchases after Jan 1, 2009 until December 1, 2009.

$729,750 is approximately 80% of $912,000. $729,750 is approximately 85% of $858,000. Most coops require a minimum of 20% down and although condos only require 10% down most lenders currently are requiring a minimum of 15% down.

Loans for more than $729,750 are called jumbo loans. Interest rates are much higher on jumbo loans. Because of the credit crises jumbo loans are harder to qualify for and rates are rising. Jumbo loans are not backed by the government they have been sold on the secondary market and there are less investors interested in them these days.

So while most buyers in Manhattan including first time buyers may not be eligible for the tax credit because of higher incomes in New York, the increase to the high conforming amount back to $729,750 will cost much less than a jumbo loan. Jumbo loans are currently difficult to acquire. High down payment (50%) are required on loans above $1 million.


To find out how much you qualify for click here for a free mortgage consultation and pre-approval.

10 comments:

  1. Obviously we won't know what kind of effects this stimulus bill will have but hopefully it will at least put the country towards the road of recovery.

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  2. How is the Manhattan market doing?
    I have 3 couples who have bought new homes in Northern Bergen County from me that we are building for them. All three will be putting their apartments on the market soon. What can they expect?

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  3. Jill, I hope so.

    Hi Richard, Prices are down from our highs but there are many variables.

    Please have your clients call me at 646-442-7166. I would be more than happy to pay you a referral fee.

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  4. Hi Mitchell,

    I am glad you are keeping up with the news and informing buyers in the New York City area of the changes that are going to be taking effect soon. These changes will definitely happen but like everything else, changes take a bit of time to take effect.

    In the future, it may be best to consult with a Mortgage Broker or Loan Officer at a Bank about these finance related matters. Understand that even after the bill is passed, lending institutions have to determine whether or not they will put the new loan limit into effect and how it will be treated.

    The conforming loan limit is still $417K for Single Family Residences, Condos, and Coops. Loan amounts between $417,001 and $625,500 are considered Agency Conforming or Agency Jumbo. Each lender treats these loan differently and there is a difference in interest rate between a Conforming loan and Agency Conforming loan. You are correct about Jumbo loans to a degree although Portfolio Lenders and Private Lenders for strong borrowers are offering interest rates comparable, if not better, than for conforming loans.

    FHA is the only lender that is using the $729,750 and there are advantages and disadvantages to getting an FHA loan. FHA only offers loans on Real Property and that does not include Coops; it includes Single Family Residences and Condos.

    In conclusion, most lenders have already sent Mortgage Brokers, like myself, memos informing us that they don't plan to raise loan limits beyond $625,500 until further notice. New buyers should keep the $625,500 number in mind as a conservative loan amount until further notice. Keep in touch with your lender and/ or mortgage consultant for updates on matters such as these.

    As a matter of fact, Wells Fargo, who you refer your buyers to is one of the lenders that is keeping the loan limit at $625,500 until further notice.

    For further details, feel free to give me a call, Luis E. Cano, Mortgage Consultant, Stanley Capital, (212) 352-2900 x. 327.

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  5. Luis E,

    Thank you for your comment. I just met with a mortgage banker at Wells Fargo. Your comment about Wells Fargo keeping the loan limit at $625,000 is absolutely not true. They will be increasing the amount to $729,500 probably with in a month.

    When ever I post a blog about mortgage information I get that information from a mortgage banker or broker.

    This past fall Wells gave a coop loan to one of my buyers for $729,500 - they were able to get that amount because it was part of the economic stimulis package of 2008. The loan limit was increased from $417K to $729,500.

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  6. Hi Mitchell,

    I am glad you check with your Banker/ Broker for you information. It is of vital importance in this ever changing market we are in.

    My comment is correct as you have verified. Wells Fargo was not going to use the new limit until further notice, which as you have confirmed, is approximately 1 month, maybe longer from now.

    In 2008, the loan limits increased from $417K to $729,750. The increased limits were in effect from Spring/ Summer of 2008 until until 12/31/2008. The changes didn't take effect with lenders until the Fall though. It took lenders almost 3 months, if not longer to implement how they were going to handle the larger loan amounts.

    I agree that your Coop deal was possible in 2008. In 2009, the loan limit increased from $417K to $625.5K. They just increased it to $729,750 and it will take time for lenders to determine how they will work with these higher loan amounts.

    As you know, Bankers/ Brokers Partner with Realtors to provide them with the information they need to help their buyers get their dream homes. If you are open to it, I would like to be and additional source of information for you as you seem to have a primary source.

    Please feel free to contact me with questions, etc.

    Luis E. Cano, Stanley Capital, (212) 352-2900 x. 327 and/ or luis.cano@stanleycapital.com

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  7. Any lenders offering conforming or conforming jumbo or what ever you call them up to $729,750 at a low rate (5%) NOW let me know.

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  8. Hi Mitchell,

    I have lenders that are offering a 5% interest rate on loans up to $729,750.

    Here are links to a few articles I feel will be of interest to you and your potential buyers.

    I am also encouraging brokers and realtors to make a difference with clients they've helped find home over the past years. RATES ARE AT HISTORIC LOWS. It would make a huge difference if you reached out to them and encouraged them to at least have a conversation with their banks and/ or a Mortgage Broker to see if it is worth their while to refinance.

    http://www.nytimes.com/2009/04/12
    /realestate/12cov.html
    http://www.nytimes.com/2009/04/12
    /realestate/12mort.html
    Here's an article where even the President of the United States is encouraging home owners to refinance!

    http://www.nytimes.com/2009/04/10
    /us/politics/10memo.html
    Feel free to contact me with any questions or for additional information.

    Luis E. Cano, Stanley Capital, (212) 352-2900 x. 327.

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  9. I appreciate it very much, at least I know from it someone is reading the contents I have here.

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  10. Hi Mark,

    I am definitely reading comments placed here. As a Mortgage Banker, I too, am always trying to make sure clients get accurate information. Makes both of our jobs more complicated when clients are misinformed.

    Did you state that loans over $1M require a 50% down payment? I can do loan up to $1.5M with 30% down and loans up to $3.5M with 40% down.

    Looking forward to keeping up with Mitchell Hall's terrific blog as it provides an open forum for a Real Estate market unlike any other.

    I can be reached at (212) 352-2900 x. 327 or luis.cano@stanleycapital.com if you have any questions or need any additional information.

    Thank you.
    Luis

    ReplyDelete

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