Most important, the temporary mortgage maximums for conforming and FHA that loans andFHA that were in place for 2008 have now been extended through 2009. 

Because these limits are region specific and loan program fees and requirements are still in flux, you should ask your Choice Finance loan officer for the limits that apply in your area and for any updated information on these programs.

Conforming loans: 

Conforming jumbo loans are available with loan-to-value ratios of up to 90% for purchases.  They are available as 15-, 20-, 30- and 40-year fixed-rate amortizing conforming mortgages, 30-year fixed rate mortgages with 10-year interest-only periods, fully amortizing 5/1 ARMs and 5/1 ARMs with 10-year interest-only periods.  However, not every lender offers all of these and prices can differ significantly among lenders.

FHA loans: 

 

 

A non-factor in the housing market a few years back, the snoozing FHA has now awakened and is the Sleeping Beauty of the mortgage market.  FHA has gone from about 3% of the market a few years ago to over 30% today.  The newly expanded involvement of the FHA has been a key in helping to stabilize the housing market in recent months.

The attractions of FHA are its low downpayment demands (as little as 3.5%) and more flexible qualification requirements.  For those who are somewhat credit challenged, FHA is an attractive choice, since credit scores are not required, though, in practice, individual lenders may look at them.  Another reason for the FHA’s new attractiveness is the increased lending limits.

The overall limit for all areas of the country is $271,050, but in high-cost areas, the maximum goes up to as high as $729,750.  FHA’s brand of jumbo loans (above $271,050, $362,790 in high-cost areas) come at a price. Borrowers must pay discount points of around 1 1/4 points, or between three-eighths and one-half percent added to the interest rate. The spread has decreased in recent months.

VA loans:

A veteran with full eligibility can purchase a home costing up to the conforming limit ($417,000) anywhere in the U.S without a downpayment. The VA program does this by guaranteeing 25% of the amount of the loan.  VA loans repeatedly had been overlooked for limit increases in recent years. However, the former handmaiden is now a princess! VA loans in 2009 are available without a downpayment for loan amounts up to 125% of the median price for a single-family residence in a county.  This now means no-downpayment loan maximums of up to $1,094,625 in the very highest cost areas of the U.S.

Check with your Choice Finance VA loan officer for the maximum in your area.  The VA program comes with substantial upfront (“funding”) fees for those making no downpayment, but motivated sellers can often be persuaded to pick up the tab.  The fees are lowest for those using the VA program for the first time and are waived entirely for veterans with a service-connected disability.

Non-conforming jumbo loans:

Borrowers who are purchasing a home costing more than the Fannie Mae/Freddie Mac jumbo conforming loan ceiling will find a fragmented market, with each lender’s offering having its own rules and regulations, like so many sovereign grand duchies.  Individual lenders are starting to come back into the jumbo market, and we are starting to see more attractive rates and terms being offered, though they are still significantly above conforming loan rates. The best way to approach a jumbo loan is to complete a loan application and let us price it out accordingly.  In most cases, you will have to put at least 20% down and have high credit scores. 

 

 

David Wexler, Choice Finance Corporation

 

 

 

This entry was posted on Tuesday, May 5th, 2009 at 9:35 am and is filed under 2) General. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.