In January of 2009 the Temporary Loan Limit increases that allowed those in High Cost Areas to borrow up to $725,000 went down. I live in Wake County, NC – not a “high cost” area… but it did affect our FHA Mortgage Lending Capabilities, and we went from $295,000 on December 31, 2008 to $271,050 on January 1, 2009.
Fast forward to September, 2011. The Temporary Loan Limit Increase again runs it’s course, and on October 1, 2011 the Maximum Loan Amount for FHA mortgages in Wake County went OVERNIGHT from $295,000 to $271,050.
I was BUMMED.
I know the folks in California and Washington and everywhere else that were suddenly back to reality and not able to do the massive loans under FHA were bummed to… and while I don’t generally think of our Real Estate Market to be similar to those High Cost Areas, this one time, I expect we have some shared empathy.
You see the day BEFORE the change, I could make a FHA loan on a $305,000 house. The buyers could get a FHA loan, with 3.5% down payment, and they could get a non-owner occupying co-Borrower on the loan if they needed it to qualify. That’s a great program!
On October 1st, that same buyer could only purchase a home worth about $279,800. That’s a BIG drop. And if they found the house they liked, was the Seller now in a position of having to LOSE that equity?? I am concerned that the Sales Prices in our area are going to see a Drop!
So I contacted my Senator and Congressman.
On October 20, 2011, the U.S. Senate acted to restore the higher residential mortgage loan limits for loans purchased by Fannie Mae and Freddie Mac and loans insured by the Federal Housing Administration (FHA) that expired on September 30, 2011. The action was in the form of an amendment to the Agriculture, Rural Development, Food and Drug Administration and Related Agencies Appropriations Act of 2012. By restoring the higher loan limits, the maximum loan amount for a one-unit home in a high cost area would return to $729,750. The current limit for such loans is $625,500.
Last week, the President signed legislation what will increase FHA loan limits (not FNMA or FHLMC Limits) to the September 30, 2011 limit. This is good news for Home Buyers and Home Sellers in Wake County! How long it takes for this to get through the system, is a question, but we should be able to take applications, and get case numbers for the new loan amounts in the next few weeks!
As of December 1, 2011 until at least October 1, 2012 – the loan limits in Wake County will remain at the $295,000 limit. The current administration says, however, that we can expect a new “MIP” (PMI) rate change for high cost FHA loans in 2012… we’re hoping that means the ones over $400,000 – and not the ones over that floor of $271,050.
If you have questions about qualifying for a FHA Mortgage Loan in Raleigh… a first time home buyer program or a mortgage loan for Veteran’s, call Steve and Eleanor Thorne, Mortgage Banker in Cary , 919-649-5058. We do MANY of these loans every month, and we offer today’s lowest interest rates!