Why It Just Became Much Easier To Buy a Home
Since the pandemic began, Americans have reevaluated the meaning of the word home. That’s led some renters to realize the many benefits of homeownership, including the feelings of security and stability and the financial benefits that come with rising home equity. At the same time, many current homeowners have decided their house no longer meets their needs, so they moved into homes with more space inside and out, including a home office for remote work.However, not every purchaser has been able to fulfill their desire for a new home. Here are two obstacles some homebuyers are facing:The ability to save for a down paymentThe ability to qualify for a mortgage at the current lending standardsThis past week, both of those challenges have been mitigated to some degree for many purchasers. The FHFA (which handles mortgages by Freddie Mac, Fannie Mae, and the Federal Housing Administration) is raising its loan limit for prospective purchasers in 2022. The term used to describe the maximum loan amount they will entertain is the Conforming Loan Limit.What Is the Difference Between a Conforming Loan and a Non-Conforming Loan?Investopedia explains the difference in a recent post:“Conforming loans are the only loans that meet the requirements to be acquired by Fannie Mae and Freddie Mac. Jumbo loans, which exceed the conforming limit, are the most common type of nonconforming loan.”What Difference Does It Make to Me as a Home Buyer?A Forbes article earlier this year explains the benefits of a conforming loan and why they exist:“Since lenders can’t sell non-conforming loans to Fannie Mae or Freddie Mac to free up their cash, they’re a bit riskier for the lender. This is especially true for jumbo loans, which aren’t backed by any government guarantees. If you default on a jumbo loan, it’s a huge blow to the lender.Thus, lenders generally charge higher interest rates to compensate, and they can have even more requirements. For example, lenders who give out jumbo loans often require that you make a down payment of at least 20% and show that you have at least six months’ worth of cash in reserve, if not more.”What Happened Last Week?The FHFA has significantly increased its Conforming Loan Limits for 2022. Sandra L. Thompson, FHFA Acting Director, explains in the press release that:“Compared to previous years, the 2022 Conforming Loan Limits represent a significant increase due to the historic house price appreciation over the last year. While 95 percent of U.S. counties will be subject to the new baseline limit of $647,200, approximately 100 counties will have conforming loan limits approaching $1 million.”This means that more homes now qualify for a conforming loan with lower down payment requirements and easier lending standards – the two challenges holding many buyers back over the last year.The Federal Housing Administration (FHA) also increased its Conforming Loan Limits for 2022. That could also mean an easier path to homeownership for many prospective buyers. As the Forbes article explains:“FHA loans can be very beneficial if you don’t have as much savings, or if your credit score could use some work.”Bottom LineBuying your first or your next home may have just gotten much easier (less stringent qualifying standards) and less expensive (possibly lower mortgage rate). Let’s connect to discuss how these changes may impact you.Resources:To get more information on the new FHFA Conforming Loan Limits, click here.To get more information on the new FHA Conforming Loan Limits, click here.Content previously posted on Keeping Current Matters
Win When You Sell (And When You Move)
If you’re trying to decide when to sell your house, there may not be a better time than this winter. Selling this season means you can take advantage of today’s strong sellers’ market when you make a move.Win When You SellRight now, conditions are very favorable for current homeowners looking for a change. If you sell now, here’s what you can expect:Your House Will Stand Out – While recent data shows there are more sellers getting ready to list their homes this winter, there are still more buyers in the market than there are homes for sale. If you sell your house now before more houses are listed, it will get more attention from serious buyers who are eager to find a home.Your House Will Likely Get Multiple Offers – When supply is low and demand is high, buyers have to compete with each other for a limited number of homes. The latest Realtors Confidence Index from the National Association of Realtors (NAR) shows sellers are getting an average of 3.6 offers in today’s market.Your House Should Sell Quickly – According to the same report from NAR, homes are selling in an average of just 18 days. As a seller, that’s great news for you if you’re looking for a quick process.Win When You MoveIn addition to these great perks, you’ll also win big on your next move if you sell now. CoreLogic reports homeowners gained an average of $51,500 in equity over the past year. This wealth boost is the result of buyer competition driving home prices up. You can leverage that equity to fuel a move, before mortgage rates and home prices climb higher. To get a feel for how rates are projected to rise, see the chart below.The longer you wait to make your move, the more it will cost you down the road. As mortgage rates rise, even modestly, it will impact your monthly payment when you purchase your next home. Waiting just a few months to make that change could mean a long-term financial impact.The good news is today’s rates are still hovering in a historically low range. According to Doug Duncan, Senior VP and Chief Economist at Fannie Mae:“Right now, we forecast mortgage rates to average 3.3 percent in 2022, which, though slightly higher than 2020 and 2021, by historical standards remains extremely low . . .”Selling before rates climb higher means you can make your move and lock in a low rate on the mortgage for your next home. This helps you get more home for your money and keeps your payments down too.Bottom LineAs a homeowner, you have a great opportunity to get the best of both worlds this season. You can truly win when you sell and when you buy. If you’re thinking about making a move, let’s connect so you have the information you need to get the process started.Content previously posted on Keeping Current Matters
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