New Limit Means Conventional Buyers Can Afford More Home Loans Between $333,701 and $360,000 May Be Refinanced For Lower Conventional Rates
Livonia, Mich. – Nov. 16, 2004 – Quicken Loans, the nation’s leading online lender, is immediately raising its conforming (conventional) loan limit to $360,000, enabling home buyers to get more for their money without paying a premium for “jumbo” rate mortgages.
Conforming mortgages carry interest rates that are as much as a half-percent lower than non-conforming “jumbo” mortgage rates. This $26,299 increase in the single-family loan amount will allow more home buyers to qualify for lower-rate conventional mortgages.
Because conforming loans are guaranteed by the housing agencies Fannie Mae and Freddie Mac they carry lower mortgage rates. Each year the agencies adjust the conforming loan limits, based on average annual increase in home price the previous year. This announcement is usually made in late November, with the change effective in January. Quicken Loans’ is raising its conforming limit ahead of this announcement, with the new limit effective immediately.
Quicken Loans offers home buyers and homeowners the following tips to help consumers take advantage of the new conforming limits:
Home buyers:
Home buyers looking at mortgage loans ranging between $333,701 and $360,000 will be able to obtain lower conventional interest rates instead of a “jumbo” rate on their mortgage. This means they can afford to buy more home for the same payment.
Example: A prospective buyer who determines they can afford a monthly payment of $2109 previously could qualify for a jumbo loan up to $333,700 (6.5% interest). That same buyer now can obtain a larger conventional loan in the amount of $351,798 (6% interest) for the same mortgage payment of $2109.
LARGER HOME, SAME PAYMENT
| Loan A (Jumbo) | Loan B (Conventional) | Difference | |
|---|---|---|---|
| Loan Amount | $333,700 | $351,798 | $18,098 larger loan |
| Interest Rate | 6.50% | 6.00%. | 5% less in interest rate |
| Monthly Pmt. | $2,109 | $2,109 | Same payment |
Homeowners:
Homeowners currently in non-conforming (jumbo) loans between $333,701 and $360,000 may be able to refinance their loans to take advantage of a lower rate.
With the conventional loan limit increased to $360,000, the monthly payment for a homeowner with a 30 year fixed rate mortgage would drop $117 a month (from $2,275 to $2,158). This equates to a savings of $1,404 a year, or $42,000 over the 30 year life of the loan.
REFINANCE
| Loan A (Jumbo) | Loan B (Conventional) | Monthly Savings | |
|---|---|---|---|
| Loan Amount | $360,000 | $360,000 | — |
| Interest Rate | 6.50% | 6.00% | .5% |
| Monthly Pmt. | $2,275 | $2,158 | $117 |
Consumers who wish to determine their potential savings, or the amount of home they can afford to purchase, can use the calculators at the Quicken Loans Web site https://www.quickenloans.com. Or, they can talk with a mortgage banker directly by calling 1-800-251-9080.
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About Quicken Loans Inc.
Quicken Loans Inc. is the largest online mortgage lender and the 17th largest retail mortgage lender in the country, according to National Mortgage News. Based in Livonia, Michigan, the company employs more than 2,200 mortgage professionals and closed more than $12 billion in mortgage loans during calendar year 2003. The QuickenLoans.com Web site has been named a “Best of the Web” mortgage site by Forbes, Money and PC Magazines and Quicken Loans ranked #13 on FORTUNE Magazine’s 2003 list of the “100 Best Companies to Work For” in America. For more information, or to apply for a mortgage or home equity line of credit visit https://www.quickenloans.com.