There is nothing more satisfying than making an investment for your future. One of the most important investments you will make in your life is when you buy a house. When purchasing a home, loans rates are typically less expensive if the home is financed under a conventional loan with mortgage brokerage companies like Fannie Mae and Freddie Mac.
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The great news is that the mortgage loan limits just went up! Now, you can borrow up to $647,200, versus the previous limit of $548,250, with the interest rates remaining relatively low (an 18% increase). Current market research shows it is possible to get a 30-year conventional loan for 3.25% or a 15-year conventional loan for 2.625% in this current market depending on your finances. Keep in mind, a seemingly good rate is different for everyone.
If you need to borrow more than $647,200, you’ll have to get a Jumbo loan, also known as a non-conforming loan. These typically carry a higher interest rate and stricter qualification requirements. One way to avoid a jumbo loan is with a larger down payment, but just enough so you stay within the conforming loan limits.
According to Matt Bearden, VP, and Mortgage Loan Officer, with Progress Bank, “This is a good opportunity for homebuyers. Where jumbo loans typically require 20% down payment, conventional borrowers can put down as little as 5% (or 3% for first-time homebuyers).”
The housing demands remain robust and will continue to do so in the forecasted future. However, do not let this unconventional market scare you from buying your dream house. Homeownership not only remains part of the American dream, but it also continues to be one of the best sources of wealth accumulation in America. Be sure to consult with your financial advisor before investing in your next home.
FOX 6 Money Tuesday Summary:
Financing a Home Just Got Easier
Federal Housing Finance Agency (FHFA) raises conventional home loan limits
- New limit: $647,200
- Interest rates remain low:
- 30-year: 3.25%
- 15-year: 2.625%
- Jumbo loans: Higher interest rates; harder to qualify
Stewart H. Welch, III, CFP®, AEP, is the founder of THE WELCH GROUP, LLC, which specializes in providing fee-only investment management and financial advice to families throughout the United States. He is the author or co-author of six books, including 50 Rules of Success; J.K. Lasser’s New Rules for Estate, Retirement and Tax Planning- 6th Edition (John Wiley & Sons, Inc.); THINK Like a Self-Made Millionaire; and 100 Tips for Creating a Champagne Retirement on a Shoestring Budget. For more information, visit The Welch Group. Consult your financial advisor before acting on comments in this article.
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