Tuesday, November 28, 2017 / by Geoffrey Zahler
Conforming Loan Limits Increasing - What does That mean?
Happy Tuesday everyone,
The Federal Housing Financing Agency (FHFA) announced today that beginning on January 1st, 2018, the level for a conforming loan in Clark County, Nevada (aka Las Vegas, Henderson, North Las Vegas) will rise substantially, from $424,100 to $453,100, an increase of $29,000 (almost 7%). So, what does that mean?
A conforming loan is a loan that can be written and then sold to a 3rd party holder of loans, like Fannie Mae and Freddie Mac (the two largest mortgage holders) without much issue. Any loan higher than this amount has always been referred to as a "Jumbo Loan" and come with more restrictive guidelines, and often, a higher interest rate to the borrower. With the new rate, borrowers will be able to borrow $29,000 MORE in January than they can now, and still remain in a conforming loan situation, which many lenders can lend on with a much broader range of products and services, including down payment amounts, down payment assistance programs, etc. For the Buyer, this is all really good stuff!
The other thing to pay attention to is that the current level of $424,100 was only around for one calendar year. Just this time last year, the FHFA announced a raise from $417,000 to the current level of $424,100, which was a much less significant increase. With the economy flourishing and the Real Estate market in full on recovery and expansion mode, the timing of this makes sense. While many parts of Las Vegas have not fully recovered from their peak prices in 2006, we are getting closer, at a more reasonable rate of increase. Gone are the days of +20% annual increases, which is better in the long run for our overall economic health.
What does this mean to me as a Buyer?
Well, if you were looking at homes in the $400,000 to $600,000 or so range, this is where you'll see the biggest benefit. If you were in a lower price point before, this won't help you any, and if you were in the considerably higher price bracket, this again will not help you as you are more than likely going to be non-conforming "jumbo". But if you are in that sweet spot of $400,000 to $600,000 here in the Las Vegas area, which is a GREAT price range to get an amazing property, this news is GREAT for you. Keep in mind, this is for the LOAN AMOUNT, not the purchase amount. So if you were looking to buy a home, with 20% down payment, and the property was $550,000, your loan amount would be $440,000 - which as of now would be non-conforming, but come January 1st, that same exact loan amount would be considered conforming, offering you, the Buyer, some benefits in terms of cost of the loan, interest rate, etc.
What does this mean to me as a Seller?
Same situation. If your price range of selling your home is in that $400,000 to $600,000 range, then all of a sudden, your home is now eligible for a higher loan value to a buyer, still keeping them in a conformed loan situation. While this will not necessarily directly increase your homes value, it may allow a higher number of qualified buyers to consider your home and make a good offer on it to you. And the more qualified buyers that you have for a home, well, you know that means more demand, and more demand is good for anyone in a Seller's market!
So while this news is not Earth shattering by any means, it is a good sign of the increased views that the economy continues to improve, and home values are recovering/recovered. If you're in a price range of under $400,000 or over $700,000 - this news doesn't really do much for you, but again, it is a sign of an increased level of belief the economy is improving.
As always - I am NOT a lender, nor do I pretend to be one on TV. If you have any questions on specifics, I would love to direct you to an amazing local lender that can in fact answer these questions, and provide details that I merely speculate on. Please feel free to contact me at 702-758-4699 or info@ZahlerProperties.com and we can get you started on a plan today!
- Geoff Zahler
The Federal Housing Financing Agency (FHFA) announced today that beginning on January 1st, 2018, the level for a conforming loan in Clark County, Nevada (aka Las Vegas, Henderson, North Las Vegas) will rise substantially, from $424,100 to $453,100, an increase of $29,000 (almost 7%). So, what does that mean?
A conforming loan is a loan that can be written and then sold to a 3rd party holder of loans, like Fannie Mae and Freddie Mac (the two largest mortgage holders) without much issue. Any loan higher than this amount has always been referred to as a "Jumbo Loan" and come with more restrictive guidelines, and often, a higher interest rate to the borrower. With the new rate, borrowers will be able to borrow $29,000 MORE in January than they can now, and still remain in a conforming loan situation, which many lenders can lend on with a much broader range of products and services, including down payment amounts, down payment assistance programs, etc. For the Buyer, this is all really good stuff!
The other thing to pay attention to is that the current level of $424,100 was only around for one calendar year. Just this time last year, the FHFA announced a raise from $417,000 to the current level of $424,100, which was a much less significant increase. With the economy flourishing and the Real Estate market in full on recovery and expansion mode, the timing of this makes sense. While many parts of Las Vegas have not fully recovered from their peak prices in 2006, we are getting closer, at a more reasonable rate of increase. Gone are the days of +20% annual increases, which is better in the long run for our overall economic health.
What does this mean to me as a Buyer?
Well, if you were looking at homes in the $400,000 to $600,000 or so range, this is where you'll see the biggest benefit. If you were in a lower price point before, this won't help you any, and if you were in the considerably higher price bracket, this again will not help you as you are more than likely going to be non-conforming "jumbo". But if you are in that sweet spot of $400,000 to $600,000 here in the Las Vegas area, which is a GREAT price range to get an amazing property, this news is GREAT for you. Keep in mind, this is for the LOAN AMOUNT, not the purchase amount. So if you were looking to buy a home, with 20% down payment, and the property was $550,000, your loan amount would be $440,000 - which as of now would be non-conforming, but come January 1st, that same exact loan amount would be considered conforming, offering you, the Buyer, some benefits in terms of cost of the loan, interest rate, etc.
What does this mean to me as a Seller?
Same situation. If your price range of selling your home is in that $400,000 to $600,000 range, then all of a sudden, your home is now eligible for a higher loan value to a buyer, still keeping them in a conformed loan situation. While this will not necessarily directly increase your homes value, it may allow a higher number of qualified buyers to consider your home and make a good offer on it to you. And the more qualified buyers that you have for a home, well, you know that means more demand, and more demand is good for anyone in a Seller's market!
So while this news is not Earth shattering by any means, it is a good sign of the increased views that the economy continues to improve, and home values are recovering/recovered. If you're in a price range of under $400,000 or over $700,000 - this news doesn't really do much for you, but again, it is a sign of an increased level of belief the economy is improving.
As always - I am NOT a lender, nor do I pretend to be one on TV. If you have any questions on specifics, I would love to direct you to an amazing local lender that can in fact answer these questions, and provide details that I merely speculate on. Please feel free to contact me at 702-758-4699 or info@ZahlerProperties.com and we can get you started on a plan today!
- Geoff Zahler
