Conventional Loan Limits Set Low in Illinois

Did you know that there are 250 zip codes across the country that have higher conventional loan limits than those in Illinois? These loans are given out through local banks and then packaged up and sold to the secondary market. Conventional Loans are backed in the secondary market by Freddie Mac and Fannie Mae and are not jumbo loans. In Illinois, conventional loans are available for less than $417,000. Within this price range, the loan requirements stipulate less money down and a lower interest rates for buyers. A jumbo loan would be for any amount over $417,000 that would require a high down payment and higher interest rate for the buyer.

North Shore Homes Dominate Expensive Illinois Zip Codes

In the State of Illinois, there are eight zip codes that Forbes includes in its list of the 500 most expensive zip codes list. Four of these eight areas (#62 Kenilworth 60043, #149 Winnetka 60093, #201 Lake Forest 60045, and #210 Glencoe 60022) are in their top 250. In comparison, Kentucky has just one zip code with a conventional loan amount of $729,000? But why have Chicago neighborhoods been left out of this particular ranking? According to the Chicago Association of Realtors, the average sales price of a single family home in 2008 in the Lincoln Park neighborhood (60614) was $1,763,826. In the historic Gold Coast neighborhood (60610), the average price was $3,071,473. Across the city, the median home prices are hovering around $500,000, well above the conventional loan standard of $417,000.

Boost Conventional Loan Limits and Spur the Housing Market

We can help spur the economy here in Chicago if conventional loan limits were increased. By raising them, buyers in the market just above $417,000 would need less money down and benefit from the record low interest rates. More property would change hands, demand for home improvement projects would jump, transfer tax stamps would be added to city coffers, and more jobs would be created by this increase in selling and buying. Increasing the loan limit means creating jobs and repairing the broken economy.

At the ground level, we need to educate and organize local Realtors and especially their clients on this issue. There seems to be a disconnect between the Realtor and individual buyer who may not know how current regulation are affecting their purchasing power. Realtors should inform perspective buyers, especially those looking to buy up, to lobby government officials, regulatory bodies, and private real estate associations to change the current limits. Part of this can be accomplished by directing buyers to local, state, and national Realtor Associations to voice their concerns and lend their support to lobbying efforts. At a national level, buyers and Realtors working together should also contact their House and Senate members to amend current regulations so that people living in Chicago or the North Shore may have a more level playing field with states and metropolitan areas that have higher conventional loan limits.

We would like to thank Serge Melki for sharing today?s photo via the Creative Commons License.