The housing market has had some price increases in homes in the past year. The spike has not only hit the home buyer's pockets but has pushed the limits of conforming loans to what experts anticipate may be record increases in 2022.
The Wall Street Journal reported that the maximum loan limit will be close to $1 million for high-cost areas for Fannie Mae and Freddie Mac. Those loans that are over the loan limits will be considered non-conforming or jumbo loans and will also be charged higher interest rates.
Many home buyers are excited about the increase. Those in high-cost areas will now not be considered jumbo loans. "There are so many benefits to having a conforming loan, increasing the loan limits will be huge," said Melissa Cohn, Regional Vice President at William Raveis Mortgage.
Freddie Mac and Fannie Mae are not lenders but they buy loans back from lenders and turn around and sell them to investors. In turn, loans are cheaper for lenders and they can offer better rates to their consumers.
Now with the higher limit for conforming loans, more homebuyers will qualify. The consumer will spend less on their down payments and can have a lower credit score to be approved.
This change comes as the home prices have increased around 7.42% between the third quarter of 2019 and 2020. Due to the rise, the baseline maximum conforming loan limit will increase.
No comments:
Post a Comment