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 February 15, 2008

Are Conforming Loans Good for San Diego, La Jolla, Del Mar & Rancho Santa Fe?
Companies like Freddie Mac and Fannie Mae are currently limiting the loans they purchase in the US to a max of $417,000. However, in Hawaii and Alaska the prices are a bit higher at $625,000. In addition to the monetary maximums, the companies also have proof of job and income as requirements. When a loan does not meet these Fannie Mae requirements it is a non-conforming loan and is not able to be purchased by the company. These loans are there for people wanting to borrow, but it will have to come from credit unions, a mortgage company, or a bank. Since investors were backing securities that ended up being bad investments they are now requiring a higher return than the previous 1/4%.
In California, loan limits are higher and politicians are thinking California will be affected in a positive way. The limit will be as high as $729,500 in the high end areas. Throughout history, real estate in residential areas has survived on a debt ratio. The dropping rates empower potential home buyers by giving them a chance to buy a more expensive home, yet may still maintaini their same monthly payment. The areas that will be most affected are San Diego ( La Jolla Luxury Homes, Del Mar Real Estate and Rancho Santa Fe Real Estate), Los Angeles, San Francisco and Riverside.

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