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7 Mortgage Related Details in the Economic Stimulus Bill You Should Know

By Ken Stampe

Mortgage and Lending with iBrandPlan.com - Grow your e-Profile & Brand

February 12, 2008 04:47 PM

1) The new loan limits go into effect on CONVENTIONAL mortgage loans originated beginning on July 1, 2007 and ending on December 31, 2008

2) Conventional Loans can be made to the HIGHER of the current conventional loan limit ($417,000) or 125% of the area median home price as determined by HUD Secretary. So unless the area median home price in your area is greater than $333,600 you will see no increase to the conventional loan limits.

3) FHA loan limits are available for loans "for which the mortgagee (lender) has issued credit approval for the borrower on or before December 31, 2008. So it appears the FHA limit changes go into effect immediately upon enactment of the legislation.

4) FHA loans for 1-unit, Single-Family Homes, can be made up to the LESSER of 125% of the area median home price OR 175% of the dollar amount limit for HUD loans for 2008. So again, this will mainly impact only those areas with a high median home price

5) FHA loans, however, WILL be eligible to a loan amount not LESS than 65% of the conventional loan limit for 2008 which is $417,000. So 65% would be an FHA loan limit of $271,050.

6) The HUD secretary will publish a list of area median home prices and mortgage principal loan limits NO LATER than 30 days from the enactment of the stimulus package legislation

7) The HUD secretary maintains the authority to make future changes to the loan limit nationally or in targeted markets as he determines is necessary.

For a full transcript of the HR 5140 you can click HERE under oath

Ken Stampe is a Mortgage Loan Originator, Mortgage Author and Mortgage Loan Officer Instructor living in Dallas, TX. Ken provided his first client a mortgage loan in 1996 and writes about home buying and mortgages to help clients make smart home mortgage loan decisions. Contact by email Ken@MortgageLoanDallas.com

What resource do SMART home buyers use?... Mortgage Calculator Bank.com

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Mike Smith

Fair Housing Resource Center - Roseville, CA

Ken

Thanks for the great post. It is nice to see and appreciated!

Feb 12, 2008 05:03 PM

William J. Archambault, Jr.

The Real Estate Investment Institute - Houston, TX

Ken,

Thanks for the heads-up.

We have to remember it's the appearance of doing something that's important to the politicians. Problem solving can be left for a latter congress.

And, HUD saves FHA again. They just don't listen. What we needed was saved FROM FHA.

Bill

PS: Have you noticed that in court and congressional hearings the attorneys and congressmen never take the oath!

Feb 12, 2008 05:42 PM

George Langford

Zephyr Real Estate - Noe Valley - San Francisco, CA

Realtor - Zephyr Real Estate

Thank Ken for the great advice. It's nice to see informed Loan brokers and much appreciated to have this information in front of us.

George

Feb 12, 2008 05:47 PM

Ken Stampe

iBrandPlan.com - Grow your e-Profile & Brand - Dallas, TX

iBrandPlan

George, Bill, & Mike......why are you guys up as late as I am? Thanks for the kind words.

Bill....I've always wondered why the judge isn't sworn in. Seems at least the judge should be expected to tell the truth. But as for the attorneys....aren't they being paid handsomely for results....not honesty :)

Feb 12, 2008 05:58 PM

Eliud Gautier

Acre Mortgage & Financial, LLC - Deptford, NJ

Branch Manager

Ken,

Thanks for the information - we'll see what happens in those areas where this will really impact our business. So let me ask you a question...based on the information you currently have - this will effect my area because right now the maximum for a single home in my region is $270K - is this correct?

Thanks for your informative post...

Feb 13, 2008 10:58 AM

Ken Stampe

iBrandPlan.com - Grow your e-Profile & Brand - Dallas, TX

iBrandPlan

Eliud,

I believe Cherry Hill, NJ is in the "Philadelphia-Camden-Wilmington; PA-NJ-DE-MD" Metropolitan Statistical Area or MSA (#37980) which if shows an average median home price of $227k for 4th quater 2007.

The HUD loan limit presently for Camden County is $292,685.

So, using the information in the article, 125% of the average home price of $227,000 is $283,750 which is NOT greater than the current conventional loan limit of $417,000 so that area is NOT a "high-cost" area and conventional loan limits will remain unchanged there.

For FHA loan limits, the LESSER of...

125% of the area median home price ($227,000) is $283,750 - OR - 175% of the current FHA dollar limit.

Obviously, the LESSER of those two is going to be 125% of the median home price but that is still below the current FHA loan limit for Camden County of $292,685. Now the changes do state the FHA loan limit will at least go up to 65% of the current conventional limit of $417,000 but again, in Camden County 65% is equal to $271,050 which is still LESS then the current FHA loan limit of $292,685.

Basically Eliud, the economic stimulus package doesn't have any impact on your area in regards to loan limits that I can see.

Feb 14, 2008 10:25 AM

Eliud Gautier

Acre Mortgage & Financial, LLC - Deptford, NJ

Branch Manager

Ken - wow - what a downer...but I hope the rest of the country gets stimulated...

Feb 14, 2008 10:41 PM

Ken Stampe

iBrandPlan.com - Grow your e-Profile & Brand - Dallas, TX

iBrandPlan

Jeff, thanks for featuring this post on the FHA Group. That's very flattering.

Feb 15, 2008 02:54 PM

Eliud Gautier

Acre Mortgage & Financial, LLC - Deptford, NJ

Branch Manager

Ken - I hate to bother you again but what do you know about Memphis, TN and the New FHA limits -

Is Memphis area going to see an increase of the FHA limits? I think the current limit is hovering around $200K.

Eliud

Feb 18, 2008 05:20 AM

Ken Stampe

iBrandPlan.com - Grow your e-Profile & Brand - Dallas, TX

iBrandPlan

Eluid,

From Cherry Hill to Memphis, huh? Going to see the KING?

For FHA loan limits, the LESSER of...

125% of the area median home price ($137,200) is $171,500 - OR - 175% of the current FHA dollar limit($200,160) which is $350,280.

Obviously, the LESSER of those two is going to be 125% of the median home price but that is still below the current FHA loan limit of $200,160. Now the changes do state the FHA loan limit will at least go up to 65% of the current conventional limit of $417,000 which is $271,050. So in the case of Memphis, TN it looks like the FHA limit will increase about 70k.

Feb 18, 2008 05:47 PM

Anonymous

Ford

Hey Ken, we are getting stuck with having to put more and more down it seems on a weekly basis as we try to close on a house in Tampa, FL. We are hoping that FHA increases will let us use an FHA loan but obviously don't have any idea what the new limits might be and if it is going to be possible for us to even purchase a home at this point since we are now looking at having to put 10% down and not 5% under the conventional route.

Do you have any idea what the new amount might be in Hillsborough County?

Thanks for your time and information

Feb 20, 2008 02:49 AM

#11

Anonymous

Jason E. Christ

Ken,

Thanks for the blog, very helpful information. Do you have an idea when we can expect lenders to offer products at the new limits? Rates tend to be trending upward. Is Wells Fargo waiting until HUD publishes area median home prices?

Jason

Feb 21, 2008 09:33 AM

#12

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