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Loan Limits Get a Boost-Will Sales Follow Suit?
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| April 2008 |
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| Loan Limits Get a Boost—Will Sales Follow Suit? |
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On March 17, Countrywide implemented temporary FHA and conforming loan limit increases—which may help boost home sales by adding more loan options for higher priced homes.
Resulting from The Economic Stimulus Act of 2008, the temporary loan limit increases—available through December 31, 2008—enable qualified borrowers in high-cost areas to enjoy more competitive pricing on higher loan amounts than under traditional non-conforming loan program guidelines. The new loan limits vary by geographic area and are based on 125 percent of the median home price in an area. Current FHA loan limits can be viewed at the U.S. Department of Housing and Urban Development’s (HUD) website at https://entp.hud.gov/idapp/html/hicostlook.cfm.*
For FHA fixed-rate loans, this amount increase is a significant boost to previous limits, which were capped at $362,790 for the 48 states of the continental United States. According to HUD, the FHA loan limit increase could help hundreds of thousands of home owners and buyers across the country who were previously priced out of government-backed loans to have access to more affordable home loan options.1 This means that more home buyers may be able to take advantage of more flexible qualifying guidelines, no minimum credit score, no maximum income limits, competitive interest rates and lower down payment requirements that often are allowed with FHA loans versus non-FHA loans. At Countrywide the higher loan limit program is called “FHA Plus.”
The increased loan amount for conforming fixed-rate loans—referred to at Countrywide as “agency jumbo” loans—also could provide a tremendous benefit for those qualified buyers in the market for homes priced above $417,000, which was previously the ceiling for conforming loans within the continental United States.2 Now, these buyers may benefit from the more attractive pricing of agency jumbo loans—that is, loans between $417,000 and the current limit of up to $729,750 in some areas—versus nonconforming loan pricing. (Ask for details, as pricing and guideline restrictions may apply.) Agency jumbo loans are available for owner-occupied homes, second homes, and investment purchases.
These more affordable mortgage alternatives stemming from FHA and conforming loan limit increases could help turn more browsers into buyers—and give your sales a powerful boost in the coming months.
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HUD News Release, March 4, 2008, http://www.hud.gov/news/release.cfm?content=pr08-026.cfm&CFID=8182681&CFTOKEN=16417710* |
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Product guidelines and pricing for home loan applications under the temporary "agency jumbo" loan limit increases will differ from lending parameters for home loans under traditional conforming amounts. |
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Equal Housing Lender. ©2008 Countrywide Bank, FSB, Countrywide Home Loans Division. Member FDIC. Trade/service marks are the property of Countrywide Financial Corporation, Countrywide Bank, FSB, or their respective affiliates and/or subsidiaries. Some products may not be available in all states. This is not a commitment to lend. Restrictions apply. All rights reserved.