Jumbo mortgage deadline looms
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In short, there are three categories of mortgages where there used to be two. In addition to the conforming and jumbo, there's now that chimera known as jumbo conforming. To confuse things even more, the jumbo conforming limit varies by county, depending on house prices -- and in most counties, there are no jumbo conforming loans.

Changes coming in 2009
Here's another complication: The jumbo conforming limits will go down substantially in some counties at the beginning of 2009. Take Los Angeles as an example. In 2008, the jumbo conforming limit there is $729,750. On Jan. 1, the limit drops to $625,500. If someone in L.A. wants a $700,000 mortgage -- either to buy a home or to refinance an existing loan -- it's a jumbo conforming loan if closed in 2008 and will be a higher-rate jumbo loan if closed in 2009. (The map of FHA loan limits currently on Bankrate.com contains the 2008 limits. It will be updated with the 2009 limits in mid-December.)

For borrowers in the above situation, it's important to act now because of the time it takes to process and sell a mortgage on the secondary market.

Banks "don't want to get stuck with it," says Dick Lepre, senior loan consultant with Residential Pacific Mortgage, a brokerage in San Francisco. So banks want to get these loans closed with plenty of time -- at least two weeks, preferably -- to sell them on the anemic secondary market.

Many lenders set their application and closing deadlines long before Nov. 7, when the Federal Housing Finance Agency announced the 2009 reduced jumbo conforming limits. HSBC's application deadline for brokered loans was Oct. 24. Other banks told brokers to get their applications and loan locks in by Nov. 15. Some banks wanted the loans to be closed before Dec. 1 and the boldest by Dec. 15.

Lepre says: "The cutoff days for the 2008 jumbo conforming are different for different people because their agreements with Freddie Mac and Fannie Mae are different, because the time it takes to deliver it is different."

Once the loan is closed, it won't switch categories. A conforming jumbo closed in 2008 remains a conforming jumbo in 2009. It won't suddenly become a jumbo loan with a higher rate.

In addition to Los Angeles, some of the most populated metro areas in the country will see an identical drop in the conforming limit, from $729,750 to $625,500: the San Francisco Bay Area, Silicon Valley, the District of Columbia and its Maryland and Virginia suburbs, and greater New York City and Long Island. The same will happen in a few exclusive resort areas, such as Nantucket County, Mass., and Pitkin County, Colo.

Other areas will see declines in the limit, but not as precipitous. Naples, Fla., for example, will go from $531,250 to $448,500.