It is important for all active buyers and sellers to be aware of the approaching loan limit change as of October 1st. Currently, buyers can borrow up to $729,500 in Monterey County at conforming loan rates, which is called the High Balance Conforming Loan. This loan amount is decreasing in Monterey County to $483,000 on October 1st. Different counties have different loan limits, but because Monterey County not only includes higher priced areas such as Carmel and Pebble Beach, but areas in Salinas that have been greatly affected by distressed properties, our conforming loan limits are dropping to one of the lowest levels at $483K. Essentially, the cost of a jumbo loan, anything over $483,000, is going up. And some buyers who qualify for today's High Balance Conforming Loan won't qualify for what will be a Jumbo loan in a few short months.
Not only should buyers act quickly to lock in rates at our current historic lows, but sellers should be motivated to price their homes well and sell before this deadline. I'm sure new products will bridge the gap eventually, but it is safe to say that loans will become more expensive for borrowers and the buyer pool may decrease in the short term. It is also important to remember that although the cost of borrowing is increasing, we are still a far cry away from the once double digit rates we saw in the '80s.
Click here for a complete list of loan limits per county in California.