May 19th, 2011 3:23 PM by Eric Fang
Q: I heard that the conforming limit changes to 625K in a few months. Does this mean that all loans up to 625K would be considered regular conforming (i.e. same as today's $417K rate)?
A: The temporary high-balance loan limit of $729,750 willbe reduced back to 625k. But 625k loan will still have higherrate than 417k loan. Dor any loan amounts over 417k willstill be high-balance conforming loan; any loan amounts over 625k will be Jumbo loans.
And Jumbo loans can not be sold on the secondary market(FredditMac and Fannie Mae). That's why Jumbo loan rates are higher.
Some other borrowers asked why 7/1ARM high-balance rate is much higher than 5/1ARM high-balance rate. The answer is the same:7/1ARM high balance rate is not a Fannie Mae program. Theseloans can not be sold on the market. Some lender do offer7/1ARM or 10/1ARM(over 417k loans), but they are portofoliolenders. They are either insurance companies or banks or private investors.