If you’re thinking about buying a home, now may be the best time to do it. Starting Oct 1st buyers (and sellers) may have to deal with much more stringent rules regarding their maximum allowable loan amount. The new limits on conforming loans, mortgages eligible for government guarantees, are said to roll out in October of this year. Both buyers and sellers are likely to feel the pain as even tighter credit availability becomes the new reality.
As the government tries to reduce its footprint in the housing market, limits on government-backed loans are scheduled to reset to prior levels — a high of $625,500 in some markets — which, some say, could lead to higher mortgage rates and more downward pressure on home prices.
What is really relevant for those in our area is that the impact of resetting loans levels will fall on middle-of-the-market buyers and sellers, like those in the Charlotte market
Our concern for our readers is that prospective borrowers could face higher mortgage interest rates for loans that exceed the new caps, which would increase the overall cost of owning a home.
Taking into considering the lowering of guaranteed loan levels, prospective buyers may have to look at less-expensive properties in order to compensate for putting more money down and higher interest rates. The issue is that this scenario could exacerbate existing weakness in the middle-priced segment of the market.
Ergo, sellers are going to feel the impact too, especially if their asking price is above the new limits. This all does not bode well for the already struggling housing market or the economy.
Being proactive, consumers can start preparing for the shift now, ahead of the Oct. 1 transition. The best thing consumers can do now is evaluate their needs and do their research now.
Consumers should look for a closing guarantee and lenders that are going to be able to lock in your rate as quickly as possible, because your rate could float even over the time.
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