The rise of home values mostly benefited homeowners and sellers in 2020. In 2021-2022 buyers are catching a break as well with conforming loan limits being increased. Between 2019 – 2020 home values rose an average of 7.42%, according to the FHFA House Pricing Index (HPI). This means that the conforming loan limit will also rise 7.42% from 2020 – 2021, giving homebuyers a higher cap before jumping into jumbo loan territory. Well – drumroll, please – the current conforming loan limit is set at $510,400, and it’s officially increasing to $548,250.
This increase is important as it gives borrowers more opportunities to borrow funds at the most competitive rate levels, and having a broader purchase range to avoid jumbo interest rates is a big advantage. Jumbo rates are typically at least .250% percent higher than conforming rates. Increasing conforming loan limits gives low-down payment buyers more buying options so they can avoid being outbid on a home.
These loan limit increases can also empower refinancing options for anyone who is a current homeowner and not planning to move anytime soon. Refinancing should always be something to consider when you review your upcoming years’ financial goals, and many people do debt consolidation refinance loans to help get a handle on things before things like holiday spending. It’s also a little-known fact that you can skip two mortgage payments when refinancing. That little bonus basically pays for any refinance loan cost!
Loan limit increases take effect in January, but you don’t have to wait to get started. We’re currently processing several loan applications now utilizing the new loan limits for January closings, so if you’re looking to run through your specific options, give us a call.
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 today.
Mike Miles NMLS ID: 265927; Fountain Mortgage NMLS: 1138268