After the big news of the tax rebate, it is time to look at the other provisions in the economic stimulus plan presented by House leaders and the Bush Administration. One of those is a change in the conforming loan limit. The Seattle Times reports on this change to what is considered a conforming loan:

It would raise loan limits temporarily above $700,000 for the quasi-government entities Fannie Mae and Freddie Mac, which fund the bulk of the nation’s mortgages. Until now, these entities couldn’t buy and package mortgages larger than $417,000, the so-called conventional-loan limit.

While the Bush economic plan was announced Jan. 18 didn’t address the conforming loan limit, this new plan does. This is designed to make it possible to purchase homes, backed by the government, in higher-priced areas that include many major urban areas in the U.S., such as New York, Seattle, California and expensive locales like Hawaii.

It will probably help, providing the necessary funds to help borrowers achieve the lower interest rates that come with a conforming loan (as opposed to the rather rates associated with a “jumbo” loan). However, it is important that mortgage lenders carefully review the borrowers before giving out the loans. The home buyer still needs to be able to afford the home.

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economic stimulus, Bush economic plan, tax rebate

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