Will The New Year Bring Important Changes to Mortgages?

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Will The New Year Bring Important Changes to Mortgages?

Dec 04, 2016

A new year is coming! 2017 is less than 30 days away! For many people, a new year creates the perfect foundation for setting goals. One goal that often appears at the top of the list is purchasing a new home. However this upcoming year is said to bring in some changes that may affect your home-purchasing dreams.

It all started ten years ago…

In 2007, the financial markets were in a bubble which caused the housing market to crash in 2008. Ever since then, certain components of home financing have been “frozen in time.” One of these components is called the national conforming loan limit.

What exactly is the national conforming loan limit? A conforming loan is a mortgage loan that conforms to GSE (Fannie May and Freddie Mac) guidelines. Many factors go into these guidelines: Income, debt-to-income ratio, credit score and of course the size of the loan. The size of the loan is what we’re going to focus on in this article.

Since 2007, the national conforming loan limit (size of the loan) has been locked at $417,000 for single family homes. Any loan that goes over this amount is considered to be outside of the guidelines and is called a “jumbo” loan.

Now, Federal Regulators are considering raising the conforming loan limit to up to $427,000. This can be good news for borrowers. Why exactly is that? Keep reading.

higher limit

Higher loan limits and you.

bottle on the beach

I know what you might be thinking, “$10,000 may not make that big a difference,” but overall, it does. An increase in the conforming loan limit means the economy and housing market are rebounding. This is a good thing for a few reasons:

1) Home prices and interest rates might stay competitive for you.

As a buyer, your goal is to get the very best home for an affordable price and rate. A change in the housing market means a change in price which could lead to a slight increase in market values across the nation. So having an extra $10,000 could help you stay competitive if prices go up.

Also, if the interest rates stay low in 2017, you’ll be able to get a bigger loan at a good rate!

2) You may be able to take advantage of a jumbo loan.

A change in the conforming loan limit doesn’t normally effect borrowers who can afford a jumbo loan (a loan that exceeds the $417,000 limit). So, if you find yourself with a low debt-to-income ratio, a great credit score, and solid income, you may qualify for more loan.

Also, most home buyers who qualify for more than the loan limit can get better interest rates. So, if you find a home that is above the limit, focus on making sure that you get the best interest rate, too. This can easily be done if you work with a real estate agent. As an agent, I help my clients get the most out of their home needs by looking at the possible factors. Please contact me below if you have questions on how this works.

3) Sellers can benefit from these changes too.

Loan limit increases means buyers can afford more home. This is an incentive for sellers to put their homes on the market which creates more supply for buyers.

Buying a home is a big decision and you shouldn’t do it alone.

We won’t know for sure what the new limit will be until the Federal Regulators make a decision. If GSE guidelines change, you’re gonna need someone you can count on to walk you through the home-buying process.

If you’re in the market for buying or even selling a home, contact me. We’ll work together to turn your dreams into a reality!

Felecia’s Raving Fans

“Felecia Rozansky is the best real estate agent ! She walked me through buying my first home and answered every little question I had. Other realtors whom I previously met from different offices were too pushy and it just seemed like they saw me as another sale. Felecia actually cared and took care of everything from a lender to a handy man. I have recommended her to many of my friends.”

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