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The post Graduated Payment Mortgage Program appeared first on Christie Mitsumura Blue Seas Team.

Here is the chart showing the loan limit updates for the year 2023:

What does this mean for borrowers?

Borrowers can benefit from the increases in loan limits mostly due to the fact that conventional lending guidelines are more forgiving than jumbo loan guidelines.  Any loan above the conventional loan limit falls into jumbo loan territory, and may be more difficult to qualify for.  For example, many jumbo loan products require at least 10% down payment and good to great credit scores.  Conventional loans require 3-5% down payment, and are far more forgiving in terms of FICO score.

These increases also mean that more cash is available to home owners who want to use conventional cash out refinance mortgages, and investors who want to purchase more expensive investment properties using conventional guidelines.

With home prices rising drastically year over year since 2020, these loan limits should help more borrowers access competitive financing terms , and help those in higher priced markets buy a home without an immense down payment.

1st Time Over $1 Million

2023 marks the first year FHFA will allow Fannie Mae & Freddie Mac backed conventional mortgage loans exceeding $1 million dollars in high cost markets for single family homes.  This will help buyers obtain loans to help buy homes in expensive metro areas or areas where median home values have exceeded the million dollar mark, without the need for an intimidating down payment.  To fully understand the benefit, take a competitive jumbo loan product and compare the down payment requirement on a $1.1M home.  With a competitive jumbo product requiring a 20% down payment, that’s a $220,000 investment (before closing costs!) to get into a home.  With a conventional loan product requiring just 5% down, the initial investment shrinks to $55,000, helping to make it easier to achieve the dream of home ownership in higher cost communities.

For more information, or to see what the loan limits are in your community, reach out to me today!

The post 2023 Conventional Loan Limits appeared first on Christie Mitsumura Blue Seas Team.

The Budget and the Plan

In order to get a renovation loan, you need to have a pretty good idea of the scope of your home project.  The cost and timeline are 2 things to be aware of, and when applying, it helps if contractors are already lined up with budgets and the cost breakdown for materials and labor (for most renovation loans, you’ll need contractors familiar with the draw schedules of renovation loans) as well.  Once you know the scope of your project, how much the work will cost, and who will complete it, you’ll be able to move forward with an application for the proper type of renovation loan.

Conventional or FHA?

Both conventional and FHA loan programs offer renovation loan options as part of their product suite.  Conventional has limited offerings, and FHA renovation loan offerings vary based on the scope of the project.  Generally speaking, minor projects with no major changes to an existing structure can be covered under an FHA 203k (streamline) loan, and FHA offers financing as well for energy efficient home upgrades through the EEM program.  For more complex, expensive, or structural projects, the full 203k is offered by FHA, and conventional offers the FannieMae Homestyle Renovation options.

These projects generally function in a similar fashion to each other, with a property value being considered after the completion of the noted renovations.  An appraiser will determine what the property of a home will be after renovations are done, and the financing is then based on that as completed valuation.  This allows a lender to finance most (and many times, all) of the costs of renovations without exceeding the value of a home.

While renovation loans aren’t necessarily difficult to process, it makes sense to work with a loan officer that’s familiar with the products being offered because there are certain forms, documents a contractor needs to complete, and some steps along the way that differ from more traditional financing.  Another consideration in recent years has been difficulties with supply chains and availability of workers – renovation loans require work to be completed within a certain period of time (usually within 6 months of closing) so it’s important to have professionals in place that can and will deliver on their promises and budgets.

Factoring in the above information, renovation loans can be a great way to turn a home with “great bones” into a dream home, or take a property that may be priced well but is “dated”, and update it to match the latest trends, creature comforts, and money saving efficiency upgrades.  From square footage additions to bath and kitchen remodels, depending on the type of renovation loan, there’s a lot that can be done (and financed!) with these product offerings.

The post How Do Renovation Loans Work appeared first on Christie Mitsumura Blue Seas Team.

These changes represent an increase in area median home prices, and county changes are based on local rates of appreciation.  These changes should allow home buyers more flexibility and more favorable loan terms in areas where home prices have seen increases over the past year.  One major perk of using conventional financing is the ability to finance up to 95% of a home purchase, having only a 5% down payment requirement.  For some borrowers and situations, conventional loans require only a 3% down payment, making it possible to achieve the goal of home ownership without bringing in a larger down payment that many jumbo loan products require.

Another perk of conventional financing is competitive rates and mortgage insurance terms for those with excellent credit.  For those with good (but not exceptional) credit, conventional financing is another great option, since most jumbo financing options either require excellent credit (leaving those without excellent credit with minimal options), or coming with higher rates.

2022 loan limits are in effect for loans delivered to Fannie Mae & Freddie Mac in calendar year 2022, but loan applications can begin being processed under the new loan limits effective immediately.  Your MasonMac loan officer can further explain how the increase in loan limits may be able to assist you in getting better loan terms or qualifying for more home.

For an interactive map that shows loan limits for your specific county, you can click here .  If you have questions on how these loan limits can help you, or any other mortgage related questions, you can ask an expert here.

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