Interest rates on home loans that conform to the Fannie Mae and Freddie Mac guidelines tend to be lower than non-conforming loans. That’s why it’s good news that the Federal Housing Finance Agency (FHFA) recently announced that the conforming loan limits have increased to $510,400 in 2020. This is a $26,050 increase from the $484,350 loan limits of 2019. In some higher-cost areas, the loan limits could be as high as $765,600. Click here to view a map of all the loan limits across the US. As for loans insured by the Federal Housing Administration (FHA), the loan limit for low-cost areas went up to $331,760, and the loan limit for high-cost areas went up to $765,600. There are also some special exception areas such as Alaska and Hawaii with higher loan limits. Here are two ways to benefit from this increase:
1 – Consider Refinancing
It may be worth it to consider a home loan refinance if:
- You currently have a home loan that is near the loan limit
- You’d like to make some home improvements
- You’d like to consolidate other debts into your home loan (such as home equity loans or credit cards)
- You’re paying mortgage insurance and your home has increased in value considerably from the time when you purchased the home
- You anticipate a change in your cash flow situation in the coming months (college funding, retirement, elder-care, etc.)
2 – Consider Buying a New Home
Interest rates are still very attractive, and home prices are still affordable. It may make sense for you to consider a new home purchase in 2020.
Contact us for more information or to run the numbers for your specific scenario.