The Seattle Times
Should you be concerned that the maximum loan amount you’ll be able to obtain through the biggest players in the mortgage industry — Fannie Mae and Freddie Mac — might be cut sometime next spring? You just might. That’s because mortgage applicants who no longer qualify under the revised limits will be forced to shop in the jumbo arena, where minimum credit scores and financial-reserve requirements tend to be tougher and down payments heftier than in the conventional space dominated by Fannie and Freddie.
You might also have to settle for an adjustable-rate mortgage rather than a fixed-rate. Or you might end up where you need a higher-rate “piggyback” second mortgage to afford the down payment on the first mortgage deal you’re offered. Here’s a quick overview of what could push eligible loan amounts downward and what that may mean for thousands of buyers across the country who abruptly find themselves in jumbo land. At a recent meeting in Washington, Edward DeMarco, acting director of the agency that oversees Fannie and Freddie in conservatorship, said he is seriously considering reducing loan maximums as part of a strategy to lessen federal involvement in the mortgage market.