In the past two weeks the Federal Reserve Board voted to reduce interest rates down.  So why are 30 year mortgage interest rates not falling and why can't I get a loan for over $417,000   It is simple.  Banks still do not want to lend their money because the only place they can sell their loans to currently are the GSE's-  FHA, Fannie Mae and Freddie Mac  which loan limits are $417,000 or lower.

The fed is lowering interest rates to try and help consumers and for the most part I see more loans that make sense for the borrowers in that they can save money and lock in at a fixed rate  The problem with the credit crisis over the last 12 months that lowering interest rates can't cure is the willinginess to ease underwriting guidelines to help those consumers that truely need assistance.  For the most part Homeowners with marginal credit are still struggling to get qualified as well as those with balances on their mortgage over $417,000. 

So what do you do....  Over the next few weeks Congress will be packaging the stimulus package that will increase loan limits for FHA, Fannie Mae and Freddie Mac,   once this passes I would expect applications for mortgages to rise and banks to loosen some requirements as now they will no longer have to hold the paper on the loans and will have someone to sell them to.

Talks of increasing the loan limit to 417,000 and above for FHA will do wonders for those in Option Arms or Neg Am Loans.  Many of the homeowners in these particular loans are upside down on the loans.  FHA will allow for you the homowner to secure a 2nd mortgage over equity and still take advantage of low interest rates.

If you are in the market for a home loan and owe more than $417,000 hope is around the corner hang tight and watch for this bill to pass.  Once it does you might be able to get a loan again.

 

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