HOMES: Jumbo mortgages will be defined as $625,500.

People looking to buy more expensive homes next year will have fewer options to find financing because Fannie Mae and Freddie Mac will have lower limits on the size of loans they can buy.

The changes, effective Jan. 1, will lower the limit in Los Angeles and other high-priced real estate markets to $625,500, down from $729,950. Consumers who need to take out mortgages above that amount typically pay higher interest rates for a so-called jumbo loan, which can price some would-be buyers out of the market.

For example, jumbo loans typically used to finance more expensive homes remain hard to obtain.

Before credit standards were tightened in August 2007, some 40 percent of Southern California home sales were financed with jumbo loans. In September, they accounted for just 13 percent of loans used to finance homes costing more than $417,000, said San Diego-based MDA DataQuick.

Loan limits vary by metro area and are based on the local median house price. So falling home values in some markets have pulled the loan limits down with them.

In the Boston area, for example, the limit will fall to $465,750 from $523,750. In the Baltimore area, it is scheduled to drop to $494,500 from $560,000.

And while the limit in the Los Angeles metro area will drop to $625,500 it will fall to $598,000 in neighboring Ventura County.

The Federal Housing Finance Agency, which egulates Fannie and Freddie, kept the limit for lower-cost metro areas at $417,000.

Lawmakers temporarily raised the loan limits for Fannie and Freddie in an economic stimulus bill passed in February and revised them in a housing bill passed over the summer.

There are fears that the reduced limits will hurt the housing market next year. Fannie and Freddie have become the dominant source of mortgage funding since last year’s collapse of the subprime lending market.

The National Association of Realtors is pressing lawmakers to keep the limit at $729,950.

How wonderful the world would be if you could make money from your credit cards. Well, you can. And here is how to do it.

Before we go on remember that if you hold debt on your cards – and you should have already transferred this debt to a card offering 0% on balance transfers – you must proceed with extreme caution. Getting rid of your debt is your prime concern. Do that first.

Also if you have been undisciplined with your cards in the past you need to change your ways. See cards as an investment. Handle them as you would cash.

First up, you need a bank account that offers the highest possible rate of interest and instant access to your money. You can look for the best current deals by visiting websites like www.moneysupermarket.com/currentaccounts/ and the money sections in the quality Sunday newspapers.

This account is where you will keep your money to pay off your credit card bill. You should look for an account that pays around 5%.

Now get yourself a credit card that offers an introductory rate of 0% on new purchases. The Sainsbury’s credit card is one that does this, offering new customers an interest-free period for 10 months.

The important thing is to ensure you pay the minimum off each month. The easiest way to ensure that you do this is to set up a direct debit from your bank account. (Your minimum payment is usually 2-3% of your balance.)

The beauty is that while your spending is swelling the balance owed on the credit card, your money in the bank is earning interest. This interest is your profit.

At the end of the agreed period of interest-free grace, you pay off the debt and never use the card again. You should destroy the card lest you are tempted to use it.

Or why not go one better and not pay off the debt? Why not simply transfer the debt on maxed-out card to another new card that offers 0% on balance transfers and 0% on purchases and then keep going?

The one problem you might encounter is that your credit rating will only allow you to take on so much debt. To circumvent this, apply for a few cards at the start of the exercise. Experts recommend applying for four in one go.

And so long as you are strict without yourself this master plan will work. Make sure you always have enough cash in your bank account to pay off the debt.

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