By Les Christie, CNNMoney.com staff writer

Last Updated: March 7, 2008: 12:23 PM EST

NEW YORK (CNNMoney.com) — Mortgage costs just got cheaper for buyers in high-cost areas.

The size of loans that can be guaranteed by Freddie Mac and Fannie Mae was raised today by the Office of Federal Housing Enterprise Oversight. The new, higher loan limits will stay in effect through the end of the year, allowing the government sponsored enterprises (GSEs), to buy much higher-priced mortgages in some areas of the country.

Also today, the size of the loans that the Federal Housing Authority (FHA) can insure was raised by Housing and Urban Development (HUD).

Both moves will lower borrowing costs for buyers of higher priced homes, and aim to boost flagging real estate markets.

Best time to buy a home in four years

Previously, Fannie and Freddie could only insure mortgages of up to $417,000, called conforming loans. That meant, assuming a 20% down payment, that only buyers of homes costing $521,500 or less were eligible for mortgages with GSE backing.

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Tags: FHA, Fannie Mae, Freddie Mac, GSEs, HUD, buyers, economy, financing, foreclosure, investing, lending, loans, mortgages, real estate, real estate outlook, when to buy, where to buy by Aria
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BERNANKE’S MORTGAGE RELIEF PLAN

By Jeannine Aversa
ASSOCIATED PRESS
Wednesday, March 05, 2008

WASHINGTON — Ben Bernanke is using his bully pulpit to try to keep more Americans from getting swept up in a wave of home foreclosures.

Bernanke, chairman of the Federal Reserve, urged mortgage lenders Tuesday to reduce the principal on loans for many people whose homes are no longer worth as much as what they owe. He also suggested that the Federal Housing Administration broaden its insurance program and let more people switch from subprime mortgages to cheaper, federally insured loans

“This situation calls for a vigorous response,” Bernanke said in a speech to a banking group in Orlando, Fla.

Even with relief efforts under way by industry and government, foreclosures and late payments on home mortgages probably will increase “for a while longer,” Bernanke warned.

Rising foreclosures threaten to increase the problems in the housing market and the economy.

“Reducing the rate of preventable foreclosures would promote economic stability for households, neighborhoods and the nation as a whole,” Bernanke said. “Although lenders and servicers have scaled up their efforts and adopted a wider variety of loss-mitigation techniques, more can, and should, be done,” the Fed chief said.

Some owners can avoid foreclosure by selling their homes to pay off the loans. But that’s not possible when the homes are worth less than the mortgage balance.

Bernanke acknowledged that reducing balances might be a tough sell to lenders.

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Tags: austin, austin real estate, economy, financing, foreclosure, investing, lending, money, mortgages, politics, real estate, real estate outlook by Aria
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Try to spend no more than half your after-tax income on housing, one expert suggests

By Mary Ellen Slayter
THE WASHINGTON POST
Sunday, January 20, 2008

For most people, a home is the most expensive purchase they will ever make. Figuring out how much they should spend can be overwhelming.

Online calculators can give a ballpark idea but shouldn’t be relied on for a final decision, said Paul Cocozza, a certified financial planner in Arlington, Va. “That’s taking too much of a shortcut for such a large commitment.”

How to decide? Your budget is a function of your income, household expenses, credit and savings.

Traditionally, the guideline was that no more than 28 percent of gross income should go toward housing expenses, including the mortgage payment, homeowners insurance, homeowners or condo association fees, and real estate taxes. No more than 36 percent would go toward those housing costs plus all other debt expenses, including car notes, school loans and credit card payments.

Many lenders have stretched those requirements, allowing up to 39 percent of gross income to go toward housing and other debt. But just because a lender says you can afford a loan doesn’t mean you should spend that much. >>>Click for Full Article

Tags: buyers, financing, lending by Aria
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