Higher Loan Limits for 39 Counties could see potential benefits
According to the FHFA, Higher Loan Limits for 39 counties will be increased. Read on to see how this will effect you..Colorado, California, Washington and Massachusetts are all part of this list.
“Fannie Mae and Freddie Mac are restricted by law to purchasing single-family mortgages with origination balances below a specific amount, known as the “conforming loan limit.” Loans above this limit are known as jumbo loans.
The national conforming loan limit for mortgages that finance single-family one-unit properties increased from $33,000 in the early 1970s to $417,000 for 2006-2008, with limits 50 percent higher for four statutorily-designated high cost areas: Alaska, Hawaii, Guam, and the U.S. Virgin Islands. Since 2008, various legislative acts increased the loan limits in certain high-cost areas in the United States. While some of the legislative initiatives established temporary limits for loans originated in select time periods, a permanent formula was established under the Housing and Economic Recovery Act of 2008 (HERA). The 2016 loan limits have been set under the HERA formula. ”
That’s good news for buyers in newly hot markets such as Denver, where would-be buyers are struggling to afford homes. Conforming loans appeal to buyers because they tend to offer lower interest rates than nonconforming loans
In most places, the limit will remain at $417,000, FHFA said. The agency said it can’t raise the baseline loan limit until home prices return to pre-decline levels. The average U.S. home value in the third quarter remained below its level in the third quarter of 2007, FHFA said.