H.R. 5140 PASSED - Relief on the Way!

With an 81 to 16 vote, the Senate passed an amended version of H.R. 5140, a $150 billion plan to jumpstart the economy with temporary tax breaks for consumers and businesses, extend benefits, and most importantly, two provisions designed to assist the housing market.

The bill temporarily increases the size of loans that may be purchased by Fannie Mae and Freddie Mac, raising the current level of $417,000 to reportedly up to $730,000 in the highest cost regions of the housing markets.

Rest assured, we at Loan Source Financial are following this development closely and are hard at work preparing the tools and resources you’ll need to make the most of this important legislation once it actually becomes law.

How does this affect YOU? As a consumer:

1. Refinancing existing larger loan amounts or combining 2 loans. Anyone with an existing first mortgage that exceeds the $417,000 limit today and/or second mortgage could conceivably refinance into a single loan with a conforming loan limit rate that historically is .5% to 1% better than the existing “jumbo” rates.

2. Purchasing a home with better interest rate. Under the new provision, anyone planning to purchase a home this year would be able to qualify for the conforming loan limit rates and enjoy the option of having a rate that would be better than the current jumbo rates.

3. Less documentation needed to qualify: Loans that fall within the conforming loan limits are subject to easier underwriting through streamlined processing. What this means is that if the borrower has good credit scores and solid work history the secondary market (i.e. companies such as Fannie Mae and Freddie Mac) may require less documentation to qualify for a mortgage loan. For example, if a borrower meets the initial requirements for qualifications (Credit score, work history and available assets) the secondary market my not require tax returns or W2’s to underwrite the loan.

We’ll keep you apprised of any developments and opportunities as they become available. Please call if you have any questions or would like to review your situation in anticipation of this potential opportunity.