The Federal Housing Finance Agency (FHFA) recently announced increases to upfront fees for certain high-balance and second-home loans. These changes are in effect for loans delivered on and after April 1st, but will affect rates well in advance, so if you’ve been thinking of getting a new loan, we recommend you act now.

What are upfront fees?

Upfront fees are premiums added to the cost of a loan to account for higher risk scenarios. Though the name implies they are paid “upfront” when the loan is initiated, they are more typically reflected in the interest rate you pay.

How much will this cost?

The exact amount depends on your loan to value ratio (LTV) – the amount of the loan as a percentage of the property’s value. A higher LTV will incur a higher fee, as it represents a greater risk. The FHFA is imposing fees ranging from 0.25% to 0.75% for high-balance loans and 1.125% to 3.875% for second-home loans. As an approximate example, a fee of 0.75% will often translate to a mortgage rate that’s 0.25% higher.

How do I know if the new fee impacts my purchase or refi?

Generally speaking, the fee structure will apply to all second-home loans (homes not used as a primary residence).

High-balance loans (offered in areas with elevated conforming loan limits) will be impacted unless they are part of certain protected programs, such as HomeReady or Home Possible, or for certain first-time homebuyers in high-cost areas.

The fees apply to loans sold to Fannie Mae or Freddie Mac, which account for the majority of mortgage loans in the U.S. Privately held mortgages will not incur the fees.

Have questions? Please reach out to learn more. We are happy to help! 

What a ride it’s been!  If you were involved in the home market in any way last year, we hope you were buckled in! Bidding wars, skyrocketing home values and low rates made it a year unlike any other for homeowners and buyers.

Let's take a look at some 2021 Mortgage Highlights:

• Inventory fell to record-setting lows, with far fewer homes for sale than buyers wanted. The resulting bidding wars created record-setting price increases, too.

• Rates remained low with a few small bumps along the way, but record rates of inflation placed them on an upward trajectory at year’s end. They are still below historical norms.

• Rising values brought large increases in homeowner equity, so even those who weren’t moving benefitted from the strong market.

What’s ahead in 2022?

If there’s one thing the last two years have taught, it’s that predictions are fallible. Here’s what we can say with confidence:

• Inflation typically brings higher interest rates. The Fed has already indicated it will likely raise policy rates (which influence mortgage rates) in 2022.

• Housing inventory remains tight as we enter the new year, though it is loosening. Continuing demand will create higher prices, but rates of increase will likely slow.

• A strong jobs market and rising wages will help to keep demand rising and affordability in check.

• Refinancing will probably continue its slide after a boom in 2020. But we’re already seeing many homeowners who previously refinanced to a low rate take advantage of their newfound equity to access cash for home improvements, debt consolidation and other investments.

Please know that the team at Greenway Mortgage is here to help with any questions or home financing needs you may have. The offer extends to your friends, family and co-workers – your referrals are always welcome and greatly appreciated.

Thanks, and we wish you a happy, healthy and prosperous new year.

The Federal Housing Agency (FHA) has just increased the amount of money that can be borrowed through its mortgage programs by more than $64k in most areas. In high cost locations, the increase is even greater. New limits will take effect in 2022.

The increases will allow more borrowers to take advantage of FHA’s benefits:

• Low down payment options
• Lower total cash-to-close requirements with gift or seller contributions
• More lenient and streamlined refinancing
• Ability to combine purchase and rehab financing
• In some high-cost areas, higher loan limits than conventional mortgages

Here are the specifics:

• In most areas, the FHA loan limit will be $420,680, an 18% increase over 2021’s limit of $356,362.
• In high cost areas, the limit moves to $970,800, an 18% increase over 2021’s $822,375.
• In some lower-cost areas or those with higher costs of construction, limits will vary.

Contact your Greenway Mortgage loan officer today for more details about how the increase can impact you.

New 2022 Loan Limits Effective January 2022

On November 30, 2021 the Federal Housing Finance Agency (FHFA) announced an increase in the maximum conforming loan limits for mortgages acquired by Fannie Mae and Freddie Mac in 2022.

The maximum loan limit for one-unit properties will be $647,200, an increase from $548,250 in 2021. Release.

The decision was based on the recovery of housing prices under the Housing and Economic Recovery Act of 2008 (HERA). They require that the baseline conforming loan limit be adjusted each year for Fannie Mae and Freddie Mac to reflect the change in the average U.S. home price.  

FHFA third quarter 2021 House Price Index (HPI) reported that house prices increased 18.05%, on average, between the third quarters of 2020 and 2021. The baseline maximum conforming loan limit in 2022 will increase by the same percentage.

For areas in which 115 percent of the local median home value exceeds the baseline conforming loan limit, the maximum loan limit will be higher than the baseline loan limit. 

A list of the 2022 maximum conforming loan limits for all counties and county-equivalent areas in the country can be found here.

Contact your Greenway Mortgage loan officer today for more details about how the increase can impact you.

2022 Conforming Loan Limits Effective January 2022

Rates could be moving up!

On November 22, President Joe Biden announced the re-nomination of Federal Reserve Board Chairman Jerome Powell. Both said they are focused on fighting inflation.

What does a good inflation fight mean for markets and rates?

Typically, the Fed’s best weapon against inflation is to cool the economy by increasing policy rates. These rates don’t directly influence mortgage rates, but the end result will likely be the same.

Bond and mortgage markets began pushing mortgage rates higher immediately after the announcement.

Questions remain about how fast and how far the Fed will go with policy rate increases and the further tapering of mortgage bond purchases, which have helped keep rates at record lows since the spring of 2020.

But one thing is clear: for anyone looking to purchase or refinance a home, it may pay to act before rates rise further. Low rates equal lower payments or the ability to buy a more expensive home for the same payment. The opposite is true as rates rise.

Reach out with any questions or to get started today.