Effective this past Saturday, October 1, the new conforming loan limits assumed their new role in our market. Current loan limits are now at $625,500, from the $729,750 “holiday” limit we’ve been at.
What does this mean?
It means for anyone with a house to sell with a price over $625,500 – your new buyer pool may be smaller! Here’s why:
As a buyer, the interest rates you hear about are almost always for loans under the conforming loan limit (in this case $625,500). That means the amount of your LOAN (not the SALE price of the home) must be under $625,500. Which means if you’re purchasing a home above that price, you’re left with two options:
1. Put enough cash down to get your loan to $625,500 to get current interest rates (right now about 4%)
2. Shop for a jumbo mortgage interest rate loan (typically higher than a regular conforming loan limit)
The change in loan limits will impact our market in 3 ways:
1. Your monthly mortgage payment for a jumbo mortgage is now higher.
2. Your out of pocket costs to purchase a home above $625,500 may be higher
3. The amount you now qualify for may be less.