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Mortgage Assistance Available to More People

Posted by  on Apr 01, 2010
 

Best Mortgage Rates Denied Those in Expensive Areas

Up until last year, those who lived in expensive areas were at a double disadvantage. Not only did they have to pay more for their homes, but they also were denied access to the lowest mortgage rates and most attractive refinancing deals.

That's because the government imposed a limit of $417,000 on the value of the home loans that Fannie Mae and Freddie Mac were allowed to back. And without Fannie and Freddie's support, borrowers had to pay premium interest rates.

Mortgage Brokers Freed to Offer Better Deals

Then, in 2008, the Economic Stimulus Act and the Economic Recovery Act allowed the Federal Housing Finance Agency to designate parts of the country as high-cost areas. Within these, FHA, Fannie, and Freddie could back loans of up to $729,750.

This year's American Recovery and Reinvestment Act extended this arrangement until the end of 2009, at which point the ceiling was due to be reduced to $625,500.

But last month, Congress changed the plan when it agreed that the $729,750 ceiling should remain in place for a further 12-months--until the end of 2010.

Lowest Mortgage Rates Make a Big Difference

The New York Times reckons that someone with a jumbo or nonconforming mortgage--one that exceeds $729,750--can pay over eight percent more every month than a neighbor whose mortgage is between $417,000 and $729,500. And even the best mortgage lenders often require jumbo borrowers to keep higher cash reserves on hand, and to make larger down payments.

Of course, everyone--regardless of the size of the loan they have or need--should regularly compare mortgage rates to make sure they get the best deal possible. Check out up-to-the-minute rates in your area here.

 

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