Mortgage Discussion for the Panhandle area

Well after the economic stimulus package was signed on Feb. 13th, we finally have some news about new loan limits. Though this information is not final and has not been released in full, here is what we have.

Good news for all FHA loans as it seems the new maximum loan for all FHA properties will be raised to $271,050 from the current $200,150. This is a huge improvement and will open up a good many homes for FHA lending. This should be very good news to everyone and help move some houses. The FHA letter is to be released the first week of March. We know this is happening so I feel comfortable taking your loan applications today.

In other news, the limits for all Fannie Mae and Freddie Mac will not change. This was nothing but rumor to start with and, as you remember I put out a blog stating this limit will not be affected in our area. The limit will remain at $417,000. Considering the market is really an FHA market now anyway, I do not believe this will have any bearing on our market at all. We will just shift some loans to FHA in the middle $200K range.

The end result will be more homes sold and financed with little or no money down through the FHA product. Call me with any questions or just have your customers call for their FHA approval today.

Home buyers are seemingly getting antsy starting to show up looking for houses again. I am sure is good news for all but the questions remains why now? There is no good answer but I am sure some positive press about interest rates have helped a good deal. What ever gets buyers moving is good news for our market.

Let us look at interest rates for this week. The rates for today are about 5.375% down from last week of 5.5%. Many question, why are rates are moving down so slowly? The simple answer is greed and profit buy the major banks and mortgage lenders. We all know the horror stories played out in the news everyday about mortgage lenders loosing money. When we have so much of a dramatic drop in rates the secondary market (those who decide rates on a daily basis) tend to take some profits and let the free market determine when rates will fall. The Federal Reserve controls short term rates and not the long term mortgage rates so the effect of a rate drop is slower to meet the consumer. I think we will see rates drop a little for a while and I am still looking for that 5% 30 year fixed rate we had for a couple of hours two weeks ago.

One last note for this blog. I hear rumors that Fannie Mae, Freddie Mac and FHA will raise the loan limits. The loan limits for Fannie and Freddie is currently $417,000.00 and FHA just over $200,000.00 depending on the county. The rumors have the loan limits being raised to $600,000.00+. Believe me rumors always seem to go too far and I think this one has as well. There is legislation to raise the limits temporarily in 2008 only but the raise is based on average home prices in an area or county. The new limits will be based on 125% of the median home price of any given area. This does not tell us anything for one good reason. HUD (Housing and Urban Development) has not ever released this information. We do not know what the median home price is so we cannot know what to expect. What I can tell you is unless the median home price is over $333,600 in your area you will not see and changes to the limit. some experts I have spoke with say our area of Escambia and Santa Rosa counties in Florida will have no increase to an increase to about $436,000.00 which will mean very little to those of us in the market. I do not want to be negative but I do want you to know the truth.

Be safe let us hear from you.