If you plan to refinance or take out a big mortgage but have not applied yet, you might have to work a little harder to get the lowest rate.
Three of the nation's biggest lenders have stopped taking applications under the current higher loan limits. The new loan limits won't take effect until Oct. 1., but lenders say they want to make sure borrowers have enough time to close by the Sept. 30 deadline.
Depending on how much you want to borrow, unless you close on your mortgage by Sept. 30, you will end up paying more for your loan. Some borrowers may not even qualify for a large mortgage under the new limits.
The maximum amount for "jumbo-conforming" loans -- which are mortgages that vary between $417,000 and $729,750 and can be sold to Fannie Mae and Freddie Mac -- will drop in many parts of the country on Oct 1. The maximum limit on those loans will be reduced to $625,500, but any borrower who needs to borrow more than $417,000 and less than $729,750 may be affected by the changes. To learn the new jumbo loan limit in your area click here.
Wells Fargo says Aug. 15 was the deadline for applications and rate locks for Federal Housing Administration and conventional conforming loans for mortgages with balances above the expected new limits. Bank of America stopped taking applications under the current limits in July, according to a spokesman. Chase also confirmed it is no longer going by the current limits.
"We still will be doing loans above those limits," says Tom Goyda, a Wells Fargo spokesman. "But those will be done through our nonconforming programs."
That means you'll still be able to get these mortgages, but since lenders won't be able to sell those loans to Fannie and Freddie, they will cost you more.
Nonconforming jumbo loans generally cost about half of a percentage point more in interest than mortgages that fall within the Fannie and Freddie limits.
Some smaller lenders, who generally are able to close quicker than the large banks, are still taking applications under the current loan limits. But don't wait too long because they will likely follow suit.
Most lenders will stop offering jumbo-conforming loans for more than $625,000 (or less depending on where you live) by Sept. 1 to allow enough time to close, says Mathew Carson, a mortgage broker in San Francisco. Loans must be closed and funded by the Sept. 30!
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