The Federal Housing Agency (FHA) has just increased the amount of money that can be borrowed through its mortgage programs by nearly $25k in most areas. In high cost locations, the increase is even greater. New limits will take effect in 2021.
The increases will allow more borrowers to take advantage of FHA’s benefits:
Here are the specifics:
Contact your Greenway Mortgage loan officer today for more details about how the increase can impact you.
On November 24, 2020 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 2021.
The maximum loan limit for one-unit properties will be $548,250 an increase from $510,400 in 2020. 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 2020 House Price Index (HPI) reported that house prices increased 7.42%, on average, between the third quarters of 2019 and 2020. The baseline maximum conforming loan limit in 2021 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 2021 maximum conforming loan limits for all counties and county-equivalent areas in the country can be found here.
WHAT DOES THIS CHANGE MEAN FOR HOMEOWNERS AND HOMEBUYERS?
This means YOU may be able to:
Purchase a higher priced home with more financing options, possibly including lower rates.
Refinance an existing, higher-rate “jumbo” loan and possibly drop mortgage insurance.
Combine 1st and 2nd mortgage
Contact your Greenway Mortgage loan officer today for more details about how the increase can impact you.
2021 Conforming Loan Limits Effective January 2021
A change is underway in the world of adjustable-rate mortgages and mortgage-backed loans such as revolving home equity lines of credit, known as HELOCs. For decades, the rates on those loans and a variety of other financial products were determined by an index called the London Interbank Overnight Rate (LIBOR). This is now being phased out in favor of a new index called the Secured Overnight Financing Rate (SOFR). Sometime after 2021, LIBOR is expected to be discontinued. However, the transition has already begun.
If you have an adjustable rate mortgage, a home equity line of credit or a reverse mortgage, it may be a good time to check with your servicer about which index your mortgage loan is tied to. Why? It could affect your rate the next time you’re due for an adjustment. To understand how this change might affect you, let’s dive into the key differences between LIBOR and SOFR.
In mid-August, Fannie Mae and Freddie Mac imposed an “adverse market conditions” fee on conventional refinance transactions equal to one-half of one percent of the loan amount causing an industry uproar and spike in rates.
Last week, they offered a short reprieve by delaying the fee until December 1st. However, this fee will likely begin to impact refi rates well before since lenders cannot be certain if a loan will be delivered before the deadline.
Rates are currently near all-time lows but will trend higher as the deadline nears. It is imperative to start the process as soon as possible and get your file in queue before volume leads to longer turn-times.
If you are interested in saving money each month; accessing cash from your home’s equity for any reason; or shortening your loan term, please reach out as soon as possible to discuss your scenario.
December may seem far away, but a lot of interested homeowners are likely to pursue a refinance before the fee increase, and the sheer volume may lead to delays. It’s wise to get started now.