New mortgage caps reduce options in high-priced real estate markets
November 7 2008 - People looking to buy more expensive homes next year will have fewer options to find financing because Fannie Mae and Freddie Mac will have lower limits on the size of loans they can buy.
The changes, effective Jan. 1, will lower the limit in high-priced real estate markets to $625,500 down from $729,950. Consumers who need to take out home loans above that amount typically pay higher interest rates, and that can price some would-be buyers out of the market.
The Federal Housing Finance Agency, which regulates Fannie and Freddie, kept the limit for lower-cost metro areas at $417,000. Some counties, including parts of Virginia, Utah and Maryland, have limits that range between $625,000 and $417,000.