Sellers Brace for New Mortgage Caps

The limits on mortgage loans backed by the federal government which were raised to $729,750 3 years ago to make it easier for borrowers in pricey housing markets to obtain financing, are set to drop to $625,500 in many markets including New York and New Jersey on October 1, 2011. According to this Wall Street Journal article some lenders are already warning borrowers that they will stop accepting loan applications for loans that exceed these limits much sooner to assure that the loans are funded by the October 1st cutoff date. The article further points out that sellers are going to have to reduce their prices if borrowing costs rise. Read article

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