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HUD ANNOUNCES NEW, PERMANENT FHA MORTGAGE LOAN LIMITS
New limits range from $271,050 to $625,500

WASHINGTON - U.S. Department of Housing and Urban Development Secretary Steve Preston today announced the new Federal Housing Administration (FHA) mortgage loan limits for single-family homes as prescribed by the Housing and Economic Recovery Act of 2008.

Beginning January 1, 2009, FHA will insure single-family home mortgages up to $271,050 in low cost areas and up to a maximum of $625,500 in high cost areas. The February 2008 Stimulus Package temporarily raised the FHA maximum to $729,750 through December 31, 2008. The new $625,500 maximum, however, represents a significant increase over the $362,790 limit that was in effect prior to the Stimulus Package.

"In today's environment where access to credit is being restricted, we need to make mortgage loans readily available to households throughout the country, and especially in high-cost areas," said Preston. "These new loan limits will ensure FHA can to continue help struggling homeowners refinance into safe, affordable government-insured loans, and allow many first-time buyers take advantage of today's buyers market"

For several years, FHA's loan levels were below the cost of the average home in communities across the nation. As a result, families who needed FHA mortgage insurance to qualify to buy a home were effectively locked out of the process. In some cases, borrowers turned to exotic subprime loans.

FHA mortgage insurance makes home financing more available to low-income and first time homebuyers. This is because the mortgage is backed by the full faith and credit of the government, freeing lenders from assuming the risk of default.

Higher FHA loan limits do not cost the government any money because the FHA Insurance Fund is fully supported by premiums paid by borrowers who receive FHA-insured mortgage loans.

The Housing and Economic Recovery Act pegs the national conforming mortgage loan limit to a house price index chosen by the new Federal Housing Finance Agency (FHFA). For 2009, the national conforming limit will remain at the current level of $417,000.

The Act says that the new FHA loan limits will be set at 115 percent of the median house price in a given area, as determined by HUD, but can not be lower than 65 percent of the conforming loan limit (the national floor). Also, the FHA mortgage limit cannot exceed 150 percent of the national conforming loan limit (the national ceiling).

Release is from the HUD website: http://www.hud.gov/news/release.cfm?content=pr08-174.cfm

Michael Shotnik-

If you are one of the many Americans that routinely watches the local news than you mostly likely think no one is able to buy or sell real estate in the current market. The media is in the business of entertaining whether it be true or false and in the case of the local Denver Real Estate market is way off. The term that is regularly used like “credit freeze” and all the publicity given to failing banks greatly discourages first time and seasoned buyers from buying a home. Any investor will tell you to buy low and sell high, now is the low point and for some reason the media is scaring people away from real estate. Homebuyers will realize the most benefit by buying in this real estate lull and selling at the next high. The process is cyclical and proven to re-stabilize and produce massive gains every time.

To set the record straight we have outlined steps to homeownership in this market:

1. Find

2. Qualify

3. Budget

Find. The first step is to find a price range and quality of home you are interested in. Denver and the Metro area vary greatly depending on the aspects of a neighborhood that are important to you. A local real estate agent can easily provide you with detailed information about a particular home or area of Denver.

Qualify. After you have decided you would like to buy a home a very important step is to speak with a mortgage professional. As a mortgage banker I can help you determine what purchase price you qualify for and also what type of loan product is the best fit for your individual situation. Many home buyers avoid this step until they are very involved in the home buying process. I always recommend starting early because by the time you find the perfect home you won’t want to talk to me about interest rates and amortization terms you’ll want to spend time at Crate and Barrell picking out your furnishings.

Budget. Whether you need to save for a downpayment or prepare for move in costs budgeting is another important aspect. As a home buyer you will have additional costs as well as financial benefits that will need to be incorporated into your monthly and annual budget. I suggest planning financially before and after the home purchase.

Finding, Qualifying and Budgeting for your new home is an exciting process. If you focus on the 3 elements laid out above you will discover just how beneficial owning your own home can be.

In an effort to educate our clients we hold monthly workshops to focus on Finding, Qualifying and Budgeting for home ownership.

EMAIL ME TO INQUIRE ABOUT THE NEXT HOMEOWNERSHIP WORKSHOP – mshotnik@summit-mortgage.com

Final bit of advice:

The absolute truth about real estate regardless of the market conditions is the sooner you get in the sooner you’ll realize your financial potential.

Michael Shotnik

Mortgage Banker

Summit Home Mortgage

P 303-800-4595

E mshotnik@summit-mortgage.com