Yesterday President Bush signed the economic stimulus bill into law. One of the key points in the Bill for the real estate industry was an increase in conventional loan limits.
The conventional loan limit has been set at $417,000 for the past 2 years. Loans over this amount are Jumbo Loans and are generally subject to higher rates and tougher underwriting guidelines. So, an increase in the conventional loan limit would make it easier for some homebuyers to get into more expensive homes and thus inspire some new property sales.
Initially the House of Representatives was contemplating an across the board 50% increase in the limit and even more in certain high cost areas. This would have raised the conventional loan amount up to $625,500 in Southeast Michigan and would have been great! The Bill that actually was passed by the House & Senate and signed by the President is an increase up to 125% of the median home price in that specific geographic area. The statistical median home price in our area is under $200,000 so the law has absolutely no impact on the conventional loan limit in Michigan. Ouch.
The good news is that the stimulus package is going to put money into the pockets of tax payers all over the nation because it includes a tax refund of up to $600 for individuals and $1,200 for married couples and $300 per eligible dependent children (there are some reductions for people in higher income brackets – talk to your tax advisor). This may generate some renewed economic growth and can’t hurt! The current market poses some great opportunities if you keep your eyes open and put in some extra effort.
Matt Carter at Inman News has more on the topic.