Sonoma County homebuyers receive good news on Fannie, Freddie loans
The Federal Housing Finance Agency on Wednesday announced an increase in home mortgage loan limits that Fannie Mae and Freddie Mac will guarantee, one that will benefit local homebuyers in 2017.
In Sonoma County, the agency increased the loan limit for a single-family mortgage by 7.5 percent to $595,700 from $554,300.
The boost will aid buyers because loans insured under Fannie and Freddie come with a lower interest rate, given they are backed by the federal government rather than the private marketplace. The two businesses, which originated as government-sponsored enterprises, were placed into conservatorship by the FHFA in 2008 during the financial crisis.
The increase for next year is timed well to keep pace with the local market. The median price for a single-family home in Sonoma County was $595,000 last month, which is a 1 percent decrease from September, according to statistics compiled by Pacific Union International senior vice president Rick Laws.
In Napa and Marin counties, the loan limit will increase from $625,500 to $636,150, the maximum amount that will be covered by Fannie and Freddie. That level also applies to high-priced areas such as San Francisco, Alameda and Contra Costa counties.
Nationwide, the agency bumped up its maximum loan limit from $417,000 to $424,100, the first time the baseline has increased since the housing crisis. That will be a benefit to buyers in Mendocino and Lake counties.
Besides the lower interest rates for loans that conform within the new limits, it will also help buyers who are struggling to come up with a down payment, said Otto Kobler, branch manager of Summit Funding Inc. in Santa Rosa.
Those who can’t qualify for Fannie or Freddie-backed loan are left to go find a mortgage in the jumbo market. The problem is that a down payment in the jumbo market is about 10 percent because of more risk assumed by investors, compared to 5 percent under loans backed by the federal government.
“That’s a big deal,” Kobler said. “That’s make or break for people.”
You can reach Staff Writer Bill Swindell at 707-521-5223 or email@example.com. On Twitter @BillSwindell.