SHOPPING FOR A LOAN LIMIT

In today's market, it's not so much a Tale of Two Cities, as it is a Tale of Two Loan Limits... or if you count FHA loans, make it Three. There are basically three loan sizes out there. Instead of Small, Medium and Xtra Large, we have FHA, Conventional, and Jumbo.
FHA loans are those that are direct government loans. They tend to be more forgiving of past credit problems, allow a higher debt ratio and a lower down payment. The loan amount FHA allows varies county to county,and state to state. To find out what your FHA loan limit is,
click here .
That would be the "Small". Relative to everything else, this is the single most popular, and easiest home loan to get.
Next is the Conventional, or "Medium" loan. The term "Conventional" is kind of a catch phrase for those loans backed by FannieMae & FreddieMac . Both of them have a maximum loan limit of $417,000. While more restrictive than what it used to be, this money is still flowing into the home loan market. Both FHA and Conventional loans are most often 30 or 15 year, fixed rate loans that offer interest rates in the 5%-5.5% range.
Now the hardest type of loan (some might say almost impossible) to get right now is a Jumbo ,or "Xtra Large", loan. These are for home loans above $417,000. They come at a much higher interest rate and a much larger down payment. I saw a very interesting article in today's L.A. Times that hi- lites this point. See the article here.
So what does this all mean to you ( he asked rhetorically)? Well, if you are selling your home in a short sale or non-distressed sale, keep in mind someone has to buy your home. And unless they have cash, they have to get a loan. It may be wise to set your price close to that $417,000 range so that the buyers have a much better shot at getting financed to buy your home.
Now, if you're a buyer, guess what? You have to shop at the same loan store as everyone else. Do you want to try to find a loan that very few are getting, or would you rather get your financing in order and take advantage of an incredible opportunity to buy a home at the lowest price in years?