Conforming or Jumbo Loan? What is the difference?

Conforming Loans:

Conventional loans may be conforming and non-conforming. Conforming loans have terms and conditions that follow the guidelines set forth by Fannie Mae and Freddie Mac. These two stockholder-owned corporations purchase mortgage loans complying with the guidelines from mortgage lending institutions, packages the mortgages into securities and sell the securities to investors. By doing so, Fannie Mae and Freddie Mac, like Ginnie Mae, provide a continuous flow of affordable funds for home financing that results in the availability of mortgage credit for Americans.

Fannie Mae and Freddie Mac guidelines establish the maximum loan amount, borrower credit and income requirements, down payment, and suitable properties. Fannie Mae and Freddie Mac announces new loan limits every year.

Loan Limits for Conforming Loans are $729,750


Jumbo Loan:

Jumbo Loans

Loans above the maximum loan amount established by Fannie Mae and Freddie Mac are known as 'jumbo' loans. Because jumbo loans are bought and sold on a much smaller scale, they often have a little higher interest rate than conforming, but the spread between the two varies with the economy.

For more information please Contact George Langford!

415.3363.8191

Housing Affordability - High Record for 3rd Straight Quarter!

November 19, 2009 - Nationwide housing affordability, bolstered by affordable interest rates and low house prices, hovered for the third consecutive quarter near its highest level since the series was first compiled 18 years ago, according to the National Association of Home Builders/Wells Fargo Housing Opportunity Index (HOI) released today.

The HOI showed that 70.1 percent of all new and existing homes sold in the third quarter of 2009 were affordable to families earning the national median income of $64,000, down slightly from a near-record 72.3 percent during the previous quarter and up from 56.1 percent during the third quarter of 2008.

"At a time when housing is at its most affordable, we applaud the recent actions taken by Congress and President Obama to stimulate housing by extending the federal tax credit beyond its Nov. 30 deadline and expanding it to a wider group of eligible home buyers," said NAHB Chairman Joe Robson, a home builder from Tulsa, Okla. "With interest rates now lower than last quarter, the tax credit will encourage even more home buyers to enter the market and help stabilize housing and the economy by creating new jobs, stimulating home sales, reducing foreclosures, cutting excess inventories and stabilizing home prices."

Mortgage Impound Accounts - What are they?

Mortgage Impound Account Payments

The purpose of a mortgage impound account is to have you pay the lender each month:

-your regular loan payment

-income taxes

-hazard insurance


The first charge is a lender charge. The other two charges are third party charges that you must pay periodically or annually. Instead of waiting around to pay these amounts, the lender collects this from you monthly.

Mortgage Impound Account Purpose

The lenders collects this money and pays it on your behalf, in theory. In practice sometimes they are late with this, so you need to keep on top of this.

Lenders often give a borrower a discount on their interest rate if they agree to pay their additional expenses such as taxes and insurance on a monthly basis.

The purpose of this is to make sure you don't get behind on paying these other charges.

Some lenders can require that you do this every month. This is usually if the size of your loan is over 90% of the value of your property. This can vary from lender to lender and state to state.

When comparing offers from lenders you can check to see if the rate reflects these impound accounts and the discount that goes with it.

It is also important to know what your total monthly payment will be after you get your new mortgage loan. If it includes impounds this can end up being several hundred dollars more per month extra.