This information was sent to me by a local lender, Jennifer Ellison on Summit Funding. Jennifer can be reached at 805-565.5750 ext 107 or jellison@summitfunding.net
I want to make you aware of a change to the conforming loan limit, set to take effect on October 1, 2011 that will impact you. Santa Barbara sellers and buyers will feel the effect of this change. The loan limit is set to decrease from $729,750 to $625,500 in Santa Barbara county. Assuming that Fannie Mae, Freddie Mac and HUD/FHA follow through with the loan limit changes (it is expected they will) what will be the impact for buyers in Santa Barbara?:
The impact to buyers: Currently, buyers with strong credit, income and a 20% down payment can borrow up to $729,750 with relative ease and very favorable rates. FHA borrowers can borrow up to $729,750 with a minimum down of $3.5%. As of October 1, 2011, maximum financing for both conforming and FHA will be limited to $625,500. Loan balances in excess of this amount will fall into traditional jumbo programs.
The impact to sellers: Some sellers will experience the change in the form of a smaller pool of buyers. Those sellers with homes currently listed between $910,000 and $780,000 will see the greatest impact. The net effect of these changes means additional downward pressure on sales prices as fewer buyers are able to qualify for conventional financing with 20% down. By October 1st, a buyer with 20% down will only be eligible for financing the purchase of a home selling for $780,000 and $520,000..Should you be thinking about making a purchase or selling your property, please contact me and Jennifer to discuss this more.
