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You Listening, San Francisco? Higher Fees, Lower Loan Limits = More Expensive Mortgages

Today’s news from the mortgage world sucks, especially for San Francisco Real Estate.
From the SF Realtor’s Association:

Higher Fees, Lower Loan Limits = More Expensive Mortgages

Fannie Mae and Freddie Mac are raising the risk-based fees they charge on mortgages.

Beginning today, lenders will be required to pay the new fees on loans they sell to Freddie Mac, and starting on April 1 they will be required to pay the new fees on loans they sell to Fannie Mae.

Currently, the fees range from 0.25 to 3 percent of the loan amount. It is expected that the new fee will be one-quarter or one-half a percentage point higher.

In addition, the maximum loan that can be insured by Fannie Mae, Freddie Mac or FHA in high-cost areas will drop on October 1 from $729,750 to $625,500.

According to the California Association of REALTORS®, the likelihood of the maximum loan limit staying the same, given the composition of the House, is virtually nonexistent.

So, in coming months, expect more expensive mortgages.

So what does this mean to you if you’re looking to buy a home in San Francisco soon?  To put it nicely, get off of your butt and do it.

Now, if you’re not in the market for a piece of SF real estate, you can stop reading now.  This isn’t a sales pitch to convince you to buy when the time isn’t right for you.  If you’re not in the financial position to buy, or if you’re in an unstable situation where you might be moving out of the City in less than 5 years, or if you’re living in a rent controlled 5 bedroom apartment paying $500 a month rent, then stay put, do not pass go, do not get a mortgage.

But, if you’re looking for a home in SF – there’s a good chance that even if prices stay the same, loans will cost you a bit more in April, and quite a bit more if you wait until October since the rates for jumbo loans are higher and with many SF homes falling WELL above the point where a $625,500 loan limit will suffice unless you got a giant chunk of cash to put down, you’ll be paying way more for the same price.  (Unless you are looking for a home that allows you to get in under the $625,500 loan limit, then you won’t be affected nearly as much, though buying before April might not be a bad idea.)

So….. long story short, if you’re on the fence about buying an SF home, you need to decide which side of that fence you want to land on, and you need to decide FAST!

And sellers?  Yeah, you might want to list that home pretty quickly too while buyers can still afford to buy it.

And of course, if you need a San Francisco Realtor to help you climb that fence to see which side will be greener for you, or to help you list your property for sale, give me a shout – giving overly blunt advise in the most tactful way possible is my specialty. 😉