| There are
conforming and non-conforming or jumbo loans. Conforming loans
are those that Fannie Mae will purchase from originators and
limits are based on yearly changes (October to October) in the
average home price as announced by the Federal Housing Finance
Board. The cut off point in
dollars from a conforming to a non-conforming loan changes
every couple of years. The 2005 conforming loan amount
$359,650.
The interest rate on a jumbo loan is
generally higher. Eligibility for a conforming as opposed to
what is commonly called a “jumbo” loan can save a borrower a
substantial amount of money over the life of a loan. While
figures vary regionally, a conforming loan is generally priced
in the vicinity of 25 basis points less than the jumbo
variety. Fannie Mae estimates that an additional 271,500 home
owners will be eligible for conforming loans under the new
guidelines. |
