By Mike Miles
It’s a fun time of year as the holiday season is in full swing. Tis the season to celebrate with friends and family. Most likely, ’tis also the season of spending money on gifts, travel and entertainment. Many people aren’t focused on the amount spent until the bills start coming in January. This also marks a convenient month for when we all take personal inventory and decide what we want to trim off in the upcoming year; weight and finances are two main areas targeted.
This year, the Federal Housing Finance Agency (FHFA) has led the way in giving everyone a gift. I’m sure you have all been wondering what the FHFA might do for a holiday gift this year right? Well (drumroll please … drumroll?) it’s the gift of an increase in the conforming loan limits for 2020. Currently the conforming loan limit is set at $484,350 and it’s increasing to $510,400. It’s the gift that keeps on giving!
The VA max loan limit will be raised as well to match that of the conforming limit. As of today, FHA has not announced an increase but it typically will follow trends and is expected to have a new loan limit of approximately $356,000. The reason for the loan limit increase is because of increasing home values.
This increase is important as it gives borrowers more opportunity to borrow funds at the most competitive rate levels. Having a broader range of being able to avoid jumbo interest rates is an advantage. Jumbo rates are typically at least .25 percent higher than conforming rates. Additionally, increasing the FHA loan limit gives low-down payment buyers more buying options versus potentially getting outbid by conforming-financed buyers.
For anyone that is a current homeowner and not planning to move anytime soon … these loan limit increases could empower your refinancing options. Refinancing should always be something to consider every year when you review the upcoming years’ financial goals. Many people do debt consolidation refinance loans to help get a handle on excessive holiday spending. Here’s a little-known fact … did you know that you can skip two mortgage payments when you refinance? That little bonus basically pays for any refinance loan cost.
Each of the loan limits mentioned take effect in January but you don’t have to wait to get started. We are currently processing several loan applications now utilizing the new loan limits for January closings.
This weekly Sponsored Column is written by Mike Miles of Fountain Mortgage. Located in Prairie Village, Fountain Mortgage is dedicated to educating, and thus empowering, clients to make the best financial decision possible for their situation. Contact Fountain Mortgage today.
Mike Miles NMLS ID: 265927; Fountain Mortgage NMLS: 1138268