Consumers Helping Consumers

Mortgage Broker Didn't Know New Rules In Loan Limits
R.D., Rhode Island

I was talking to a mortgage broker who told me that the loan I needed was too high for a conforming loan. That meant I had to have a non-conforming loan or a jumbo loan. I realized this also forced me to have a higher interest rate on whatever kind of loan I would have.

I spent a lot of time with this mortgage broker before I found out that she had not updated herself on two things. One of these things is that my loan was for a two-unit apartment building where I was going to live in one of the apartments. Second, we had started the loan process early in the year.

On both counts the mortgage broker had understood old limits on what loans were allowed to be conforming or non-conforming. Apparently, my particular type of home is allowed higher "conforming" balances. Second, these rates increase every year. So, when I saw another mortgage broker, I found that my loan amount was actually well within the loan limits. The interest rate I have now is much lower than the original mortgage broker thought he could get me.

Equal Home Finance Bureau Comment: Despite mortgage brokers being in the profession of brokering home loans, many don't stay as educated as they ought to be about changes in federal home loan and housing regulations. In R.D.'s case above, he found out just in the nick of time that the limits for "conforming" loans, those loans that fall under the limits for Fannie Mae and Freddie Mac guidelines, change every year. And, staying within conforming limits is one way to get the best deal on a home loan. Those limits vary based on the type of home and sometimes even the state you're in. Further, these rates are updated yearly. Mortgage brokers should know this.

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