Friday, December 27, 2013 - Article by: Prospect Financial Group, Inc. -
Earlier this year the Federal Housing Administration (FHA) announced that they will reduce the loan limits in high costs areas in 2014. In the FHA's attempt to lessen the role they play in the housing market, the lower loan limits will make more people turn towards other financing options with private lenders.
When the FHA increased their loan limits in the past, it was in response to the collapse of the housing market. The higher loan limits could help more people obtain financing with perhaps a lower credit score or down payment in comparison to buyers that qualify for jumbo loans. However, the FHA now feels that the economy has improved enough to put more of a responsibility on the shoulders of private lenders.
With 650 different counties receiving lower loan limits, many Americans looking to buy will be effected. If you were planning to purchase in a high cost area in 2014 using a FHA loan, you may now need to turn towards jumbo loan financing for your purchase. Jumbo loans have stricter qualification requirements. Requirements for jumbo loans include a large down payment, excellent credit and proof of reserves. If you do not qualify for a jumbo loan in 2014, you may also have to face the fact that you will have to buy less house in order to obtain FHA or conforming financing.
The best thing to do is plan ahead if you are going to be purchasing in 2014. Call Prospect Financial Group, Inc. today to get a quote and to determine what loan programs you qualify for - 858-605-0952.
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