The Federal Housing Finance Agency just recently released that the loan limits for 2017 are going up. In many areas throughout the country loan amount sizes are increasing. In particular the conforming loan limit has also risen from $417,000 to $424,100. Here’s what this means…
Rising loan limits make it easier to secure mortgage financing. Here’s how it all breaks down- Conforming loans, not to be confused with conventional loans are loans that are bought and sold on the everyday on the open market to Fannie Mae and Freddie Mac. This benchmark number was 417k.
This number is now rising to $424,100 in 2017. This means the new benchmark loan limit for conforming loans is $7,100 more.While this number may not seem significant it becomes particularly important because loans that exceed $424,100 are considered to be Conforming High Balance which means higher pricing and higher fees as the loans are greater than be conforming loan limit. This change by the Federal Housing Finance Agency also means that the maximum county conforming loan limits also increased making it easier to get bigger mortgages or to buy a house with less than 20% down for example.
Here’s an illustration looking at the County of Sonoma the old maximum county loan limit was $554,300. In 2017 that number is changing to $595,700. This change represents an additional $41,400 does not have to be brought to the table anymore. That money can be financed instead. Essentially, the loan limit increase allows you up to borrow more money and still stay within conforming loan limits. The reason this is important is because when the loan exceeds the maximum county limit, the loan automatically Jumbo opening up the need for stronger financials.Such factors include lower debt to income ratios, stellar credit history, and a more solid financial picture.
These loan limits allow more people to borrow more money without having to put more money into their transaction. Homeowners can refinance bigger loan sizes and still stay within conforming loan limits. The change helps homeowners loans who were just a hair over 417k now stay within conforming limits. The change comes at a critical time as mortgage rates have etched up in recent weeks with the 30 year fixed rate mortgage now hovering just over 4.0%.
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