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Raising the Conforming Limit Helps California Home Loans

by Sheryl Landrum
CMR Columnist



As the foreclosure crisis surges in California and across the nation, legislation to raise the conforming loan limit has been passed. The California Association of Mortgage Brokers, as well as mortgage originators nationwide, is applauding the new legislation.

California Home Loans Are Some of the Highest in the Nation

States such as California and Hawaii that have high median home values generally have higher mortgage loans to finance. With the foreclosure crisis in the forefront of the mortgage industry, many lenders are reluctant to refinance home loans that are above the conforming loan limit of $417,000. Consumers are also finding that home loans on their new home purchases are being heavily scrutinized, and come with a higher mortgage interest rate--if they are above the conforming limit. Are Californians being unfairly penalized when getting home loans?

California Lenders Think California Home Loans Are not Given Equal Consideration

Peter Ogilvie, President of the California Association of Mortgage Brokers, argued in the January issue of the California Mortgage Press that the Senate had "been ignoring California's housing crisis, (and) refusing to recognize California as a high-cost state and, thereby, depriving residents of the Golden State of the same opportunity to achieve the American dream of homeownership enjoyed by the populations of the other 49 states." Mr. Ogilvie also goes on to argue that a Californian median-priced home of $530,830 cannot be equated to an Alaskan median-priced home of $271,000. Thankfully, however, Californians should soon be able to enjoy a higher conforming loan limit

Higher Conforming Mortgage Loan Limits Can Revamp California's Mortgage Industry

While the dust hasn't settled on the actual rise Californians will see in the conforming home loan limit, it appears that the conforming limit will be in the $600,000 or $700,000 range. Borrowers should then find it easier to qualify for home loans and find mortgage interest rates more reasonable as well. Mortgage originators are already seeing a spike in home mortgage applications, which is great for the California home loan business as well as for the state and local economies.

The change in conforming loan limits helps Californians and other states' homeowners as well. Many homeowners having trouble refinancing adjustable mortgages should benefit from the raise in the conforming limit and homeowner's unable to qualify for jumbo mortgages can now have a shot of getting into the housing market. To find out more on how this new legislation might benefit you and your home mortgage, talk to a trusted and reputable lender today.

Source:
The California Mortgage Press, Volume 12, No. 1, January 2008, CAMB Rebukes Senate for Inaction on Mortgage Reform Bills by Peter Ogilvie, President, CAMB

About the Author
Sheryl Landrum is a Senior Loan Officer with First Capital Mortgage in San Diego, California and a freelance writer specializing in mortgage issues.

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