Conforming Loan Limits Up to $729,750
Thinking of buying a loft at Luma or Evo but don't think you can swing the higher interest rates payments? Well, relief is near! The economic stimulus package signed by President Bush will soon bring 5.9% interest rate loans to buyers of luxury lofts in downtown LA. Yes, you can buy a loft at Eastern Columbia or Chapman and still have a lower conforming loan rate because the new law temporarily raises loan limits up to $729,750. So now those looking to buy a loft at Elleven for $750,000 can put 10% down and get a competitive loan for the balance of the sales price. Currently, the difference in borrowing rates between a conforming loan and jumbo loan is 1%, which is huge and a big reason why real estate is not moving in Los Angeles.
Date: Monday, February, 18th 2008 @ 11:28:18 PMViews: 1299
This blog entry currently has 5 comments posted.
Quinn
Agree and disagree. Yes, I believe that the lenders' loose lending practices spurred prices higher, despite fundamentals that could not support these higher prices. HOWEVER, raising conforming loan limits is not "irresponsible lending". Borrowers still have to put 10% down, and those "liar loan" programs are now extinct. So the only buyers who will be qualifying for loans are those with the means to purchase the home. I also doubt it will create a mini-bubble. What it will do is make buying a home more affordable as monthly payments on a 30 year fixed will be within reach of those looking to buy a new 1 bedroom in downtown LA, such as the ones being offered at EVO, Elleven, Luma, Barker, Brockman, etc.
Surge
But raising the conforming loan limit also may encourage "irresponsible borrowing". What's to stop borrowers from over extending themselves just so they can get a de luxe unit at the Eastern Columbia now that their interest rate is only 5.9%? Then we'll be back where we started.
dave
If those buyers were smart, they'd buy the lofts with more upside in the Arts district. Once that River parks project along the LA river is complete, that whole area will be rejuvenated and prices will go through the roof. Of course, the assumption (gamble) is that the council can keep its act together long enough to execute that project in the next 5 years... just in time for the "recovery" I suppose.
maria
I dunno - the Arts district is still a little scary for me. Too industrial and not "family friendly" enough for me to make the jump. The historic district feels a tad safer because there are more people walking around. The foot traffic in the arts district is too inconsistent for me to feel safe. I guess if the opened a Costco there we'd have more pedestrians? JUST KIDDING!
dave
Have you no shame? Wasn't it these low interest rates that got us into the bubble to begin with? How is it going to help the economy if the government does not allow the market to correct itself naturally. This "stimulus" package is another artificial boost to the economy that only delays the pain.