HEINDRICK SO

With the economy where it stands, this economic stimulus plan has been passed to hopefully bring a “boost” back to the economy. However, it seems every time this Stimulus plan hits the news – people are always focusing on their tax rebate checks. While a $300, $600, $1200 in the mail will be great – the focus should be elsewhere.

Granted I am in the mortgage business, the plan means one thing to me – increased conforming loan limits. Currently standing at $417,000, the plan will increase limits to $729,750 in most high cost areas (great news for California). What this means is that people who have loans below $729,750 will now be backed by government funding.

This essentially opens up a whole new market as these once “jumbo” loans now have access to conforming rates. The difference in rates can sometimes be up to a full percentage point, usually averaging a difference of about .625%.

This is huge.

Compare this to a one time check of $300,$600, or $1200 – if you have a loan below $729,750 and refinance into a low conforming fixed rate, you could easily bring in a savings of $150-300 every single month. Not only that, but those of you who could not even refinance because you were out of conforming loan guidelines now have a second chance.

If you missed the refinance boom in the last few years, this could be your chance to get your “jumbo” loan into a fixed rate conforming loan. And, if you did happen to catch the boom the last few years but got stuck with an adjustable rate mortgage, this could be your chance to “fix-your-arm” as Ditech says.

With mortgage rates at all time lows, the stimulus plan should be much more than a one time tax rebate check for consumers. Get on the ball and find out how you can prepare yourself once this loan limit increase takes effect.