An important vote is scheduled to take place in the United States Senate this week as it considers amending the Military Construction Appropriations bill to maintain a “temporary” increase in conforming loan limits.  By way of background, as part of the measures taken to boost economic recovery, Congress temporarily raised the conforming loan limits from $417,000 to $729,750 and has extended them annually through fiscal year 2011.

Conforming loans allow home buyers to access loans at more favorable rates and terms up to the $729,750 limit.  Jumbo loans are loans in excess of the conforming loan limit and they typically have higher mortgage interest rates and may have more significant down payment requirements. 

For instance, here is an example from Wells Fargo as of July 16, 2011 contrasting the difference between a 30-year fixed interest rate for conforming and jumbo loans:

                                                Conforming                        Jumbo

                Interest Rate                         4.5%                             4.875%

                APR*                                    4.634%                           5.012%

This interest rate difference represents a $23.52/month for each $100,000 borrowed.  While this may not seem like much on a monthly basis most buyers require more than $100,000 to purchase a home in our local communities!  Over the life of the loan this can make a significant difference.

We hope that you will contact our Senators and ask them to support extending the current conventional loan limit.

Sen. Dianne Feinstein — (202) 224-3841

Sen. Barbara Boxer – (202) 224-3553