In a housing market fueled by increasing buyer demand and record-low interest rates on mortgages for all types of borrowers, U.S. home prices continued inching up higher almost every month in 2020. Are you finally feeling squeezed out of your opportunity to own a home or trade-up to a better property?
Your local Colorado Springs mortgage lender, Benton Capital Mortgage Lending, has some positive news for you as 2020 turns into 2021. Your ability to finance a home that costs even more money than you were prepared to spend just got bumped higher thanks to a routine adjustment by federal government rules. And it gets even better — the adjustment applies to an array of prices and budgets, as well as benefitting BOTH first-time buyers and repeat buyers.
How much more purchasing power will you have? About 7.4 percent more. And depending on where you’re shopping for a home and what your financial circumstance is, this 7.4 percent equates to a $24,600 to $56,700 bump higher. For many buyers, it’s enough to elevate their purchasing power and win the home they want — especially when their mortgage payment will most likely only be $50 to $200 higher per month on average.
Every December, the Federal Housing Finance Agency assesses this purchasing power (called the “conforming loan limit”) on behalf of discouraged buyers in the market. The FHFA regulates this amount because its “children,” Fannie Mae and Freddie Mac (in the business sense of the word), help fund local mortgages after they are originated, making homeownership affordable for buyers.
In 2021, conforming loan limits for conventional mortgages (originated by Fannie or Freddie’s borrower standards) rose from approximately $510,000 to $548,000 in lower-cost regions and $765,000 to $822,000 in more expensive areas. Additionally, conforming loan limits on FHA mortgages (originated using Federal Housing Administration guidelines) increased from approximately $331,000 to $356,000 in lower-cost geographies and $765,000 to $822,000 in higher-cost areas.
Let’s state once again just how important this is: Your new purchasing power is between $24,600 to $56,700 higher — which has major implications for getting the home you want. And even better, some conventional mortgage programs (non-FHA) that are within conforming loan limits allow buyers to make a down-payment as low as 3, 4 or 5 percent depending on the borrower’s situation.
Each year, many homes aren’t snatched up by eager-yet-frustrated buyers. Although they can afford the monthly payment, the house is unfortunately selling for up to $50,000 higher than what the FHFA’s price ceiling will allow them to buy. By January 1st of 2021, this frustration will be fixed.
It’s a win-win for many borrowers currently home shopping as they go into January and February of 2021. Since average prices are forecasted to slowly rise nearly every month in 2021, locking-in a mortgage and purchasing a home earlier in the year could reap more of this new purchasing power sooner.
Conforming loan limits have been increasing since 2016 as median-priced home values continue rising each year across the nation. You can view a U.S. map of all county-based limits. Also, FHFA's latest "House Price Index Quarterly Report” will give you plenty to chew on, including the fact that median U.S. home prices from 1991 to 2020 have only kept rising each year (except the four years from 2007 - 2011).
Take advantage of this new benefit TODAY! Benton Capital Mortgage Lending can figure out your debt-to-income ratio, FICO score, financial variables, and get you on the road to a highly competitive, low-priced mortgage! Visit Benton Capital Mortgage Lending to start a home-purchase mortgage application. Or if you’re refinancing, text an image of your current monthly mortgage statement to 719-331-5443 and owner Mike Benton will tell you HOW MUCH money you can save each month.