Mortgage Tips
In the last few weeks the Government has introduced major changes in FHA and FNMA loan limits. The FHA loan limit was $362,790 and FNMA loan limit was $417,000. Now both have been increased to $729,750. The most important result is that borrowers with less than perfect credit that can still qualify for a full documentation loan, will be able to obtain larger loans at better rates with FHA loans then subprime lending.
Credit score requirements for FHA loans can range from 580-679. The biggest advantage to the increase in FMNA loan limits will be for borrowers with a strong credit history who can apply for a full documentation loan above $417,000 up to $729,000. This size loan was considered a jumbo mortgage which recently had much higher rates than a conforming loan.
Now these new “Conforming Plus Loans” (as I call them) will have higher rates then loans less than $417,000. Credit requirements for FMNA loans have gotten tighter, so if your score is 680-700 you will still be able to get a loan, but your rate may be higher.
The Federal Reserve has been recently dropping interest rates to stimulate the economy. These interest rate decreases do not directly affect mortgage rates. When the Fed drops rates, the Prime rate drops, which effects Home Equity loan rates, most credit card rates, and business lending. Mortgage rates are most directly affected by the trading of the 10 year treasury bill on Wall Street. When the yield or rate on the 10 year treasury takes a significant drop, rates tend to go down.
If you need more information about mortgages and rates…AskRey.
Source: Stuart Chaplin, Preferred Empire Mortgage, 914-547-4141 x 216