Effective October 1, 2011, several changes are set to take place that will impact new mortgages, including Conforming, FHA and USDA loans. These changes will impact home buyers, home owners considering refinancing and some who are trying to sell their homes.
Both conforming loan limits and FHA loan limits are set to roll back from their “temporary” higher loan amounts to levels last seen in 2008. Lenders will start doing this in advance of the October 1 “drop dead” date. Homeowners who currently have an FHA “high balance” loan amount that exceeds the new limit may still be able to do an FHA to FHA refinance. Currently the high balance loan limit for conforming and FHA loans in King County is $567,500 – this is set to be reduced to $506,000 until the end of 2011.
USDA loans, which are popular for their zero down and easier underwriting guidelines are getting more expensive on October 1, 2011 with the restructuring of the guarantee fee. It’s still an option for those who meet the income limits and who want to live in a rural neighborhood…it’s just gonna cost you more in your monthly payment in a few weeks.
Shhh….don’t tell anyone, I don’t believe that VA has decided to do any dramatic changes on October 1, they will have the same loan amounts through the end of the year.
There is an itsy bitsy tiny chance that Congress may follow VA’s lead and extend the existing loan limit for FHA and Conventional loans through the end of the year… but I wouldn’t bet on it! IF YOU ARE LOOKING TO GET A MORTGAGE THAT IS CONSIDERED “HIGH BALANCE” OR “FHA JUMBO” YOU BETTER ACT YESTERDAY NOW. This would be any loan amount over $506,000 in Seattle, Tacoma or Everett (other counties listed here).
I feel like I’ve been writing about this over and over again…from past experience, when Congress messed with loan limits, it’s a real disappointment for mortgage originators and consumers when someone realizes too late that they can no longer afford a certain program or that the program at that loan amount is gone. October will cause some mortgages to cost more, which is no treat.
Another treat set to go away in October is the 3.5% buyer incentive on Fannie Mae Homepath mortgages. Currently loans must close by October 31, 2011 in order for the buyer to receive the credit towards their closing cost on a qualified Fannie Mae Homepath property.
If you need help with with a mortgage on a home located anywhere in Washington, I’m happy to help.