FHA Loan Limits Announced

The new, ostensibly temporary (more on that) FHA loan limits have just been announced by HUD. In King and Snohomish Counties the loan limit for a single family home is a whopping $567,000. That's close to a $200,000 increase over the previous limit. In the recent past, because of the multitude of available Conventional loan programs, FHA programs have been mostly ignored. Not now. The increased limit along with less restrictive loan underwriting criteria may very well mean that FHA loans jump to the forefront of all residential loans for the foreseeable future.

What does this future hold. These limits are meant to be temporary. The thinking is that when the economy improves sufficiently, the rates can be brought back down to more conservative levels. I don't think so. Can you imagine the outcry from real estate professionals and the homebuying public when HUD tries to lower the rate?

To look up the new rates across the county go to HUD's site.

Final food for thought. If you've ever wanted to own investment property, the FHA loan limit for a fourplex with the borrower (you) living in one of the units is over $1,000,000. Wow.

Is Now The Time To Buy?

A recent article at Realtor.org references another article from Time Magazine that both discuss the timeliness of buying or selling a home... today. They both carry differing points of view. Realtor.org is persistent in presenting the fact that homeownership is key to building personal wealth over time. Time Magazine postulates a more insistent viewpoint, that waiting to buy may very well cost you money. The logic goes something like this. If the economy stays exactly as it is, then waiting may bring lower prices. However, as economies change, the very forces that cause the economy to improve will also cause interest rates to rise. To see for yourself how this might work try the following:

Go to the "Services" page of my website, www.bradsNWhomes.com and scroll down to the mortgage calculator. Enter a price of $367,000 at 0 down with an interest rate of 6% and a 30 year term. Then enter a purchase price of $331,000, 0 down, interest at 7% and the same 30 year term. What you'll find is the same payment of about $2200/month.

Think about that for a moment. If interest rates rise even modestly to 7%, home prices would have to fall by over 10% for your purchasing power to remain unchanged. In Seattle, not likely. While inventories are growing and prices have probably peaked, local job growth will continue to influence home prices for the foreseeable future.