The new Conventional Loan Limit of $567,500 for Seattle may not be all it’s cracked up to be. The program has restrictions that will rule out many situations, especially for those refinancing.
The new guidelines affect loan amounts above $417,000 to the new limit of $567,500. This new category is called “conforming-jumbo”. Here are the key features and restrictions for this category:
* The maximum loan-to-value ratio for a purchase is 90%.
* The maximum loan-to-value ratio for a refinance is 75%.
* “Cash-out” refinances are NOT allowed.
* Refinancing to combine a first mortgage and subordinate financing (2nd mortgage, heloc) is NOT allowed.
* Single-Family properties only (no 2, 3, or 4 unit properties allowed).
* Second Homes and Investment Properties are eligible, but the maximum loan-to-value ratio is restricted to 60%.
* Full Documentation is required. Stated Income or Reduced Documentation is not allowed.
* Loan programs offered are 15 & 30 year fixed rates, 5/1 arm and 5/1 interest-only arms (arms available after May 1).
* There will be a pricing “add” of 1/4% for a fixed rate loan and 3/4% for ARM loans.
* To use current market value, 6-months seasoning is required.
This program should work well for borrowers purchasing homes, and for refinancing existing single mortgages, but it will not work for those who wanted to refinance to combine a first and second mortgage.
But I have a “MacIver” thought about that. What about refinancing now to combine your first and second mortgage together into a jumbo loan, wait out the 6-month seasoning period, then refinance into the program. It would take two steps but would ultimately get you there. Of course, who knows where rates will be by then?
I’ll post more information as we get it.
