Increase in the Conventional Mortgage Cap

A key element in the Economic Stimulus package proposed today is the increase from $417,000 to $725,000 for conventional mortgages that Freddie Mac and Fannie Mae can purchase. This change will have a significant impact in high-cost areas and have the effect of decreasing mortgage interest rates ½-¾ of a point for homes valued between $417,000-$725,000. It also opens the door for non-conventional loans to be refinanced at a lower-rate conventional mortgage.