As a part of the fiscal stimulus package which the President is expected to sign into law today there is a provision designed to offer relief to homeowner’s with loan amounts above the current conforming loan limit ($417,000). However, the law is unlikely to impact most of the country.
The reasoning behind the provision is to help homeowner’s who are having trouble procuring mortgage financing because their loan amount exceeds the current conforming loan limit. The credit tightening that has taken place over the past 6 months has increased the cost of non-conforming loans and made it more restrictive in terms of qualifying.
However, the final version of the law states that conforming loan limits will remain $417,000 in all areas of the country EXCEPT those areas where 125% of that areas median home price exceeds $417,000 (not to exceed $729,750). The timeline for the temporary extends through December 2008.
For example, if an area had a median home price of $400,000 then the temporary increase of the conforming loan limit would be $500,000 (125% of $400,000). It has yet to be published what the official “median home price” is for the different parts of the country but initially it looks like the Portland- Metro AREA will not benefit from the provision.
Our initial research suggests that our median home price will be published in the range of $300,000-$330,000.
In the Pacific Northwest it looks like the only areas which will see increases are the following (Remember these are estimates for now):
Seattle/ Tacoma- $493,375
San Juan County- $477,355
Once the official figures are issued we’ll plan to give you a follow up report.