In addition to the stimulus checks that received a great deal of attention, the economic stimulus package proposed last week by President Bush and House leaders contains a provision to allow Freddie Mac and Fannie Mae for one year to purchase home loans up to $729,000 in high-priced housing markets. Currently, the limit for so-called conforming loans is $417,000. Because the alternative “jumbo” loans tend to cost about ¾ of a point more than conforming loans, this change has significant implications in areas in which the average home loan is non-conforming.
For example, according to Money Magazine, the average home price in San Francisco—the home of House Speaker Nancy Pelosi– is $656,000. Thus, if the stimulus package were to be enacted into law, a San Francisco homeowner with a mortgage equal to the value of the average home could refinance and save $410 a month on their mortgage. Calculate this over a 30-year mortgage, and we are talking about a golden state.
If you don’t think elections have consequences, the average home price in Dixon, Illinois—in the district of the previous House speaker, Dennis Hastert– is $107,000.