As most all you might already know, Congress recently passed, and President Bush signed, a $168 billion Economic Stimulus Package. Included in the package is an increase to the standard government-sponsored enterprises (GSE’s) and Federal Housing Administration (FHA) maximum loan limits. However, due to the extensive product, pricing, and delivery implications of the legislation (within Fannie Mae, Freddie Mac and the FHA), the increased loan limits will likely not be available for at least sixty days. I will be sure to post any changes as they happen. Specific details of the Stimulus Package are not yet finalized; however, below you will find an overview of the requested changes:

Overview GSE/FHA loan limit increases are temporary and will be terminated on December 31, 2008.

GSE/FHA loan limits will increase to the lesser of (a) 125% of the area median home price or (b) $729,750. The increased loan limits will be available only in high-cost areas (such as ours) – these “high-cost areas” will be defined by HUD in the next thirty days. Early indications are that only a few metropolitan statistical areas (MSAs) will be impacted – the majority of which will be located in California, South Florida, Washington D.C. and New York City.

1. The US Department of Housing and Urban Development (HUD) must define which high cost areas or MSAs will be eligible for the increased loan limits (this is expected to happen within the next thirty days).

2. Fannie Mae and Freddie Mac must determine and communicate what products will be eligible for delivery under the increased loan limits, clearly define the underwriting guidelines that must be followed and compute how these loans will be priced. Additionally, Fannie Mae and Freddie Mac will have to determine how lenders will deliver these conforming-plus loans.

3. Lenders will have to work to build new products and implement all systems and guideline changes to ensure a seamless transition. Once it is determined how the legislation will be applied and have clear guidance from Fannie Mae and Freddie Mac, Lenders will have to implement these changes in a timley fashion.

When you optimistically took out your loan to buy your home, it is likely you were thinking the market would continue on the skyrocket incline that was true well into 2005 in San Jose and the South Bay, as well as much of the state of California. Downtown San Jose condominiums provided a great investment opportunity, as did nearly every single family residence. Then you may find yourself in a bind. Many variable-rate interest loans bumped up in 2007 and will continue to bump up in 2008. In fact, loan payments may double as homeowners come to terms with interest rate increases.

Then the market in downtown San Jose, Santa Clara County and surrounding communities begn to experience sluggish action and less of a seller’s market environment. In some cases, sellers fall behind on mortgage payments. Home sellers do not have to foreclose. You can make specific, tailored arrangements with your lender to sell the home for the present market value. The bank will take a loss but you will be released from the weight of the loans. And you do not have to experience a foreclosure or a bankruptcy.

A short sale is when the amount of the loan is higher than the market value of the home. The true market value is defined as the amount someone is willing to pay for your home right now. It’s not what you would like to receive, or what your neighbors received for their home a few months ago. The true market value is not actually known until your home is on the market and valid offers arrive!

Your realtor may prove of great help to you during this process of selling for less than you owe on your home. Your realtor will step up and apply for the short sale paperwork with your lender. Then, when you receive an offer, your realtor will run it by the bank for approval. The major difference in a short sale scenario is that the seller doesn’t control exactly the terms of the home sale. The offer must go to the bank for a green light to sell your home. The advantages are many! You are released from your home loan debt. You are released from further marks on your credit. You do not have to declare bankruptcy or go through a foreclosure. The hard part to take is that you are not leaving your home with cash to buy your next place. So it is a bittersweet victory. Look to your realtor for assistance through the process.

Purchasing a property for either an investment or for your family is usually one of the largest investments you will make. When you make this investment it is a extremely good idea to know everything about this property. The best way to do this is to have inspections done. This way you learn about the insides of the home as well as the outside. Before 1980 2-5% of buyers had inspections done on a property. Since then there have been over 4 million properties sold and 50-60 % of these properties have had inspections.

Presently, sellers and buyers both order inspections. They do this for a few reasons. Sellers do this to provide the buyers with as much information as they can. It can minimize time wasted on re-negotiations from the buyer. You can reduce your liability significantly. A Realtors montra disclose, disclose, disclose! Also this can identify potential problems that can arise in the sale of the home so you can maximize the market price of the home.

Buyers want to have this information so they can feel more secure on the state of the property. If there are problems that are in the report they can be used as a negotiating tool. Even when there are already reports done on the home I always advise my clients to have their own inspection done as well. If the seller has had a reputable company do their report then there should be no surprises in the report. The inspection report can also point out positive aspects of the home, as well as the type of maintenance to keep it in proper shape.

All homes have problems even newly built homes. The question you want answered is how serious are they. This is what property inspections answer. A professional property inspection is an impartial third party visual evaluation of the physical structure, heating, air conditioning, electrical, plumbing, roofing, interior and exterior. Also make sure your inspector is ASHI certified. Being ASHI certified means that your inspector is held to a higher code of ethics

10 questions to ask your inspector from the US Department of Housing and Urban Development

Find a ASHI Certified Inspector

An update from MSN on today’s cut in the fed rate:

“In a move that thrilled Wall Street and sent stocks soaring, the Federal Reserve cut its key interest rate for the first time in four years in a bid to ensure that the softening economy doesn’t slide into a recession.

The central bank cut its key federal funds rate from 5.25% to 4.75%. It also cut the discount rate from 5.75% to 5.25%. The two cuts were larger than most Fed watchers had expected; they’d seen the federal funds rate moving only to 5%.”

Good news to anyone out there trying to purchase a home!