Stimulating Real Estate and Mortgages with HR 5140 & FHA
Amy February 20th, 2008
The President signed into law, HR 5140 on Wednesday to “To provide economic stimulus through recovery rebates to individuals, incentives for business investment, and an increase in conforming and Federal Housing Administration (FHA) loan limits.”
We’ve all been hearing and reading about the lump sum that is due to hit many Americans in the form of tax refunds, but this real estate specific stimulus can be much more beneficial than just a few hundred dollars. Whether buying, selling (and looking to move), or just interested in refinancing, this new law, in unison with low mortgage rates, could save serious cash compared to the old laws.
This new stimulus package includes a temporary increase in the FHA and conforming loan limits. Depending on your area, this is as high as $729,750. What this means is that the interest rates on this high loans will be much more competitive because the loans can be purchased on the secondary market by Fannie Mae and Freddie Mac and insured by the FHA. Before this new law was enacted, the FHA was limited in insuring loans to a maxim of $362,790. Fannie Mae and Freddie Mac has limits of $417,000. These limits resulted in fewer options for consumers and higher financing costs for loans that exceeded these limits. The new stimulus package law increases these limits substantially in high cost areas, allowing for new options and decreased financing costs for many homeowners.
With many areas in the Cincinnati such as Hyde Park, Indian Hill, Mt. Adams, which have median prices exceeding the limits above, this benefit will be seen my many Cincinnati home buyers and refinancers.
The official median home prices will be released by the Department of Housing and Urban Development no later than 30 days from Feb. 13, 2008. If you are interesting in contacting a mortgage professional to refinance or purchase, I highly recommend Sharon Natarus of Wells Fargo.
There really has never been a better time to buy housing. Prices are down slightly, rates are approaching historic lows, and now you can purchase a much larger/nicer home with better financing. However, all of this is temporary. The spring market is nearing, and will most likely tilt the scales back towards a sellers market, and rates can’t get much lower. Additionally, the new stimulus package is set to expire at the end of this year, on December 31, 2008. This means that the old limits will go back into effect after this year. Now is the perfect time to buy a new home or refinance your mortgage because after this year, your costs will be higher and your options more limited again.
- Buyers
- Comments(0)
