Quicken Loans, the nation's largest online lender, is immediately raising its conforming loan limit from $359,650 to $400,000 for homes in the lower 48 states, enabling homebuyers to get more home for their money without paying a premium for "jumbo" rate mortgages.
The $40,350 increase in the single-family loan amount will allow more homebuyers to qualify for lower-rate conventional mortgages. Because they are guaranteed by Fannie Mae and Freddie Mac, conforming loans carry interest rates that are as much as ½ percent lower than non-conforming “jumbo” loans.
Quicken Loans' action is based on anticipation that Freddie Mac and Fannie Mae will raise their conforming loan limits in January. Quicken Loans is offering their clients a head start in savings.
Each January, Freddie Mac and Fannie Mae adjust the conforming loan limit based on the average home price appreciation from October to October of the previous year. The Office of Federal Housing Enterprise Oversight (OFHEO) calculates the average price appreciation for homes in the lower 48 states, which this year is expected to be approximately 11 percent.
At current rates, the new loan limit can save homeowners a significant amount over the life of a 15 or 30-year fixed rate mortgage
Quicken Loans offers homeowners and home buyers the following tips to help them take advantage of the new conforming limits:
Existing Homeowners:
Homeowners currently in non-conforming (jumbo) loans between $359,650 and $400,000 may be able to refinance their loans to take advantage of a lower rate.
With the conventional loan limit increased to $400,000, the monthly payment for a homeowner with a 30-year fixed rate mortgage could drop $130 a month (from $2,528 to $2,398). This equates to a potential savings of $1,560 a year, or $46,800 over the 30-year life of the loan.
Prospective Home Buyers
Home buyers looking at mortgage loans ranging between $359,650 and $400,000 will be able to obtain lower conventional interest rates as a result of this action. This means they can afford to buy more home for the same payment.
Example: A prospective buyer who determines they can afford a monthly payment of $2,274 previously could qualify for a jumbo loan up to $359,700 (6.5% interest). That same buyer now can obtain a larger conventional loan in the amount of $379,284 (6% interest) for the same mortgage payment of $2,274.
Consumers who wish to determine their potential savings, or the amount of home they can afford, can use the mortgage calculators on the Quicken Loans website at http://www.QuickenLoans.com.
About Quicken Loans
Quicken Loans® is the nation's largest online retail home mortgage lender and will close $17 billion in home loans in calendar year 2005. The Quickenloans.com website has been ranked a “Best of the Web” by Forbes, Money and PC Magazine. The company employs more than 3,400 people and is ranked #12 on FORTUNE Magazine's list of the “100 Best Companies to Work for in America” and #1 on Computerworld's list of “100 Best Places to Work Technology.” For more information about the company, visit http://www.QuickenLoans.com.
