New FHA, Fannie Mae, and Freddie Mac Loan Limits
We have all been holding our breath since President Bush signed the Economic Stimulus Act, which mandated HUD (U.S. Department of Housing and Urban Development) to publish new loan limits within 30 days after the act was signed on February 13, 2008. Holding our breath until we could see the figures that we were told would help America see a light at the end of the tunnel for many homeowners on the path to foreclosure while allowing new home buyers the chance to purchase a home especially in high cost areas across America.
Our long wait is over! On March 6, The U.S. Department of Housing and Urban Development released the new FHA, Fannie Mae, and Freddie Mac conforming loan limits. What does this really mean to the American economy, homeowners, and individuals seeking to buy a new home?
American Economy
The American economy has been hit hard in the housing market sector due to fluctuations in interest rates that increased mortgage payments beyond home buyer’s means to pay. Along with this, many mortgages across America are more than the actual worth of the home due to a surplus of houses available on the market. The new loan limits will boost the housing finance market by supplying the mortgage market with a fast injection of much needed liquidity.
Home Owners
The new loan limits will allow homeowners to refinance their homes at lower interest rates through FHA, Fannie Mae, and Freddie Mac. Research provided by the NAR estimates that close to 200,000 homeowners would be able to refinance and more than likely keep their homes and around 500,000 refinanced loans could be issued which could aid in stopping or reducing foreclosures by 210,000.
Home Buyers
Home buyers will benefit especially in high cost areas where the FHA loan limits were far from close to the prices of median priced homes in the area. Research provided by the NAR estimates that the new loan limits will aid 138,000 Americans in purchasing a new home and an estimated 300,000 more homes would be sold. This would not only decrease the inventory but would also strengthen the price of homes between two and three percentage points.
The new loan limits for FHA and Fannie Mae and Freddie Mac are now designed at 125 percent of the published HUD median prices, with the low end at $271,050 and $417,000, but not to go beyond $729,750.
You can learn more about the new loan limits by visiting http://www.realtor.org/GAPublic.nsf/files/chart_hud_loan_limits_08.pdf/$FILE/chart_hud_loan_limits_08.pdf