Monday, January 27, 2014

How Will the FHA Lower Loan Limits Affect Your Business?

The Bad News - Well most of you may have already heard that the FHA maximum loan amounts are going in the toilet. Down in many areas by more than $100,000. The high limit of $729,750 is about to become more in line with FannieMae at $625,500.

This will take a whole bunch of clients out of the market in the higher cost area. Not to worry however.

If you have a purchase of $888,000 and the needed construction comes to $150,000 for a total acquisition cost of $1,038,000. Your options are to pay all cash... most can't but even if they can it may be to their advantage to finance the $625,500 and keep some of that cash fluid. Anyone with money knows the value of having that cash where they can make it work for them.

The Good News - There is still allot of business out there. Remember you can always piggy back an EEM Mortgage on top of a 203k loan and pick up some help on qualifying your buyer or exceed the "maximum loan amount" by 5% or, as most lenders apply it, up to $8,000. If you are having trouble qualifying a buyer this little known and little used feature.

Don't forget also that you can buy a pretty decent home for $648,000 and still use the loan to it's max. If you have investors wanting to leverage some of their aquisistions we have a loan program for them as well. It just isn't FHA but works just like it and has no PMI.

- Mike Young, 203k Team Leader