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Thinking of refinancing?  Think fast -- at least, before December 31st. That’s when the definition of “super-conforming mortgages” changes. Under the Housing and Economic Recovery Act of 2008, the size of  "super-conforming" mortgages in many California counties increased.  These higher limits have helped make it easier to refinance.

Conforming loan limits are determined by county by Fannie Mae and Freddie Mac. In Santa Clara County, the amount increased to $729,750 from $625,500 for single family homes.The conforming loan limit determines the maximum size of a mortgage loan that can be purchased or guaranteed by government sponsored entities (GSEs) Fannie Mae and Freddie Mac. Many California counties including San Francisco, Los Angeles, Santa Clara, San Mateo, Santa Cruz, Contra Costa and Marin fall in the $729,750 category.

How much can rates vary? At this writing (Sept. 21, 2009), a 30 year fixed rate loan for super-conforming mortgage of $729,750 at par is 5% while a 30-year jumbo loan is 6%.

Can you take advantage of the super-conforming rate even if you have a mortgage balance higher than 729,750? Yes. You can do a blended loan. Take out a first mortgage for $729,750 and a second for the balance. Overall, your interest rate will be lowered than if you had just a jumbo loan.