You may have read about the new FHA (Federal Housing Administration) loan limits included in the economic stimulus package. The package includes higher conforming loan limits for Fannie Mae and Freddie Mac, as well as higher FHA loan limits. So what does all this mean, and specifically, what does it mean to you as a homeowner who may be interested in buying or selling?
Q: What Is An FHA Loan?
A: An FHA loan is a federal assistance mortgage loan issued by federally qualified lenders that is insured by the FHA. The FHA doesn’t actually issue loans, it insures the loans that applicants have taken out with their own lending institutions. The lender qualifies the borrower through guidelines set forth by the Federal Housing Administration. If approved, the FHA insures the lending institution against loss of principal in case the borrower defaults on the loan.
Q: Who Will Benefit Most From The New Limits?
A: Regardless of the amount borrowed, the borrower benefits by receiving a lower interest rate on the mortgage than the lender may have offered without FHA approval. According to the National Association of Realtors, increasing Fannie Mae’s and Freddie Mac’s conforming loan limits will result in as many as 500,000 refinanced loans, reduce foreclosures by up to 210,000 and generate over 300,000 additional home sales.
Q: How Do I Find Out What The Loan Limits Are?
A: There’s an internet resource you can access that specifies the new FHA and GSE Loan Limits for every county in the United States. To verify through HUD (U.S. Department of Housing and Urban Development), visit: https://entp.hud.gov/idapp/html/hicostlook.cfm and enter your state and/or county and the type of limit you want.
For more information please contact Robert Prophet and the Robert Prophet Group. Send us an email or visit our web site: RobertProphet.com
