Quite a few people have asked me recently about the Economic Stimulus Package bouncing around Capitol Hill. The most important aspect of the package being “how will it effect the housing market, and more importantly, my ability to buy a home”.
The answer is a little gray right now, but it could be very important. Both the House and the Senate agree that we need to raise the limits on the maximum size mortgages our government will insure (FannieMae & FredieMac).
Why is this a big deal? Because in California and more specifically the Silicon Valley the average price of a home is well over $500,000 (closer to $750,000 in some areas). Quite a bit more than the $417,000 than our government will currently buy.
Under the proposed stimulus plan, the maximum mortgages for the government programs will jump to 125 percent of a local area’s median house price-with a top limit just under $730,000.
That’s huge. How will this play out? Will it help the current housing market? We’ll just have to wait and see.