Category: Mortgage News

Conforming Loan Limits Set To Increase For 2018

Last year, the conforming loan limit was set to increased to $424,100 for this year (2017). Now, most of the United States will see an increase for single unit properties to $453,100 for 2018.

The HERA (Housing and Economic Recovery Act) indicates that the baseline conforming loan limit should be adjusted with the change in the average home price in the United States every year.

According to the FHFA (Federal Housing Finance Agency):

According to FHFA’s seasonally adjusted, expanded-data HPI, house prices increased 6.8 percent, on average, between the third quarters of 2016 and 2017. Therefore, the baseline maximum conforming loan limit in 2018 will increase by the same percentage.

A loan is considered “conforming” when it conforms to Government-Sponsored Enterprise (Fannie Mae and Freddie Mac) guidelines.

In light of the recent announcement of the S&P CoreLogic Case-Shiller Home Price NSA Index increase from last year, and FHFA’s seasonally adjusted, expanded-data HPI increase, this conforming loan limit adjustment is a welcome change for home buyers in high valuation markets.

To learn more about this increase, you can read the press release from the FHFA by going to https://www.fhfa.gov/Media/PublicAffairs/Pages/FHFA-Announces-Maximum-Conforming-Loan-Limits-for-2018.aspx.

Under 35 Homeownership Rate Increases

by I Am Benchmark

The Rate of Homeownership has increased from 34.3% to 35.3% from first Quarter 2017 to Second Quarter 2017 for those under 35 years of age, according to a report from the United States Census Bureau.

While popular media seems to portray Millennials as a generation of renters, a whitepaper from First American lists six reasons why the number of Millennials becoming homeowners will continue to rise. Here is a quick summary.

They Are The Most Educated Generation

First American says,

“Our model shows that, all other factors being equal, the likelihood of homeownership increases by 3 percent for those that earn a bachelor’s degree over those with a high school degree. The likelihood of homeownership jumps another 3 percent for those that earn a graduate degree.”

To summarize, more education results in a higher rate of homeownership. Since Millennials are the most educated generation in the United States, we should expect to see the rate of homeownership for this group increase over time.

Marriage And Homeownership – Happy Together

As a generation known for delaying life milestones, many are marrying later. With the homeownership rate being 30% higher for married couples over non-married homes (according to First American), we can expect to see the rate of homeownership increase over time for Millennials.

Parents Prefer To Own

According to First American‘s research:

“The homeownership rate is 1.7% higher for households with one or two children compared to households with no children, and it is 5.4 percent higher for households with three or more children.”

As Millennials mature, there may be an increase not only in marriage, but also in producing the next generation. According to First American‘s latest report, this could also result in a bump in homeownership for this up and coming group.

Economics And Income

First American‘s study ties recent gains in income growth and a stronger economy to an increased willingness and ability to buy a home. While this is referring to the entire labor pool, it includes Millennials.

Benchmark.us Sessions

This is hardly proof, but it is interesting to note that ages 25-34 is the largest age group represented in visitors to Benchmark.us so far in 2017, at 32% of all sessions being within this age range.

The Future Is Here

The generations are aging, expectations are changing, and the time is right for the Millennials to take on the American Dream of Homeownership and to establish familial wealth.

HUD Lowers Mortgage Insurance Premiums for Most FHA Loans

by I Am Benchmark

[UPDATE – According to Housing Wire, This reduction has been indefinitely suspended mere minutes after Donald J. Trump was sworn in as the 45th President of the United States of America.]

The Department of Housing and Urban Development announced on Monday that they plan to reduce the Mortgage Insurance Premium for FHA mortgage loans. Since 2012, the Federal Housing Administration’s(FHA) Mutual Mortgage Insurance(MMI) Fund has gained $44 billion, and is now 32 basis points above the 2 percent threshold level required by Congress. This is ~$13 billion more than projected for Fiscal Year 2017 in an Actuarial Review of the MMI Fund for Fiscal Year 2012.

The FHA Pays It Forward

“After four straight years of growth and with sufficient reserves on hand to meet future claims, it’s time for FHA to pass along some modest savings to working families,” … “This is a fiscally responsible measure to price our mortgage insurance in a way that protects our insurance fund while preserving the dream of homeownership for credit-qualified borrowers.” – Julián Castro, HUD Secretary

According to the FHA, the reduction will return the Mortgage Insurance Premium nearly to levels seen before the housing bubble crisis. The FHA also predicts that ~1 million borrowers will buy or refinance with an FHA loan over the next year, most of whom will see reduced costs.

“We’ve carefully weighed the risks associated with lower premiums with our historic mission to provide safe and sustainable mortgage financing to responsible homebuyers,” … “Homeownership is the way most middle class Americans build wealth and achieve financial security for themselves and their families. This conservative reduction in our premium rates is an appropriate measure to support them on their path to the American dream.”

– Ed Golding, Principal Deputy Assistant Secretary for HUD’s Office of Housing.

The Takeaway

According to the FHA, annual mortgage insurance premiums will be lowered 25 basis points*, or one quarter of one percent, will come into effect on January 27th of this year. The FHA estimates that new rates could save, on average, $500 in 2017 alone for most FHA borrowers.

*For loans less than or equal to $625,500 with a maturity greater than 15 years. Please see the full report from HUD for more details of different loan scenarios and their actual MIP’s.

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Conforming Loan Limits Set To Increase For 2017

by I Am Benchmark

The Federal Housing Finance Agency has announced that it is increasing the maximum conforming loan limits for mortgage loans beginning in 2017. A mortgage loan is considered “conforming” when it is eligible to be acquired by Fannie Mae and/or Freddie Mac. (Mortgages are often sold to Fannie or Freddie so that a lender has the liquidity/money available to issue more mortgage loans for home buyers.)

The New Conforming Loan Limit

The current 2016 loan limit for single-unit properties or single family homes has remained at $417,000 for the last 10 years until recently. The FHFA has announced that the loan limit for single-family homes is increasing approximately 1.7% on January 1, 2017 from $417,000 to $424,100.

The changes were established because of The Housing and Economic Recovery Act of 2008 [pdf], which previously set the baseline loan limit at $417,000. The law also determined that after a period of housing pricing declines, the loan limit may not rise until prices return to pre-decline levels. It follows that since the FHFA is increasing the limit, it stands to reason that home pricing is back to pre-decline levels!
See also: Low Housing Inventory Driving Values Up – Benchmark (why the latest rise in home pricing is not another bubble)

FHA National Loan Limit is Up, Too

The FHA national loan limit “ceiling” will rise to $636,150, formerly set at $625,500. Additionally, the “floor” will increase to $275,665 from $271,050. The actual limit is variable by state and county. The “floor” is the lowest assigned limit, and the “ceiling” is the highest assigned limit for the nation as a whole.

The national loan limit is recalculated annually by the FHA from a percentage calculation of the national conforming loan limit. The calculated increase is positively correlated with rising home prices in high-cost markets.

What Does This Mean?

It means that the Department of Housing and Urban Development has taken notice of the trend of rising home prices. It also means that borrowers will be able to borrow more than they previously could without affecting the ability of lenders to maintain liquidity.

It’s a great time to buy!

Appraisal Shortage Causing Delays In Home Sales

by I Am Benchmark

CNBC published an article on their Real Estate blog entitled, “‘Massive’ shortage of appraisers causing home sales delays”

Below are a few quotes that summarize the story quickly, in case you don’t have the time or patience to read the article yourself.

“The appraisal shortage is massive. You’re seeing significant delays, you’re seeing cost increases, you’re seeing rate [locks] expire,” said Brian Coester, CEO of Rockville, Maryland-based CoesterVMS, a national appraisal management company.

…when the U.S. housing market came crashing down, the number of appraisers has shrunk by 22 percent, according to the Appraisal Institute, an industry association. With so few new cadets, the current population of appraisers is aging. More than 60 percent are over the age of 50.

…the decline in new appraisers is largely due to new regulations…

…appraisers no longer see a need to pay apprentices, but at the same time, licensing requirements to become an appraiser include 2,500 hours of appraisal experience to be completed in two years as an apprentice.

In some of the nation’s hottest housing markets, where sales are up double digits compared to a year ago, the shortage means searching far and wide for an appraiser.

[Home] Prices could change in the course of two months, the delay time it is now taking in some markets to have an appraisal done. Mortgage rates are also starting to move in a wider range, and that makes rate-locks ever more important.

How Does Benchmark Respond?

Our 5 Core Values have served us well. We believe that they will continue to enable us to thrive, even in a complicated market.

We built our reputation and our business on these Core Values, one of which is Relationship. Another complimentary value that we hold dear is Positive Attitude. The combination of these can go a long way in ways you may never expect. So what is our approach?

To be as clear and transparent as possible in building relationships with partners in helping our mutual clients to get their new home as smoothly as possible. Just like we pride ourselves on being thorough and courteous for our clients, we strive to be open and thorough in our communications with partners.

We have an experienced staff who search daily to ensure coverage. We foster a positive relationship with our panel of appraisers.

Our appraisers prioritize us because we pay them generously and pay them quickly.

We have an advantage over appraisal management companies, as our appraisers receive the full fee, rather than just a percentage, and we have control over both the fee and the due date.

We have clear channels of communications with our appraisal department to quickly and efficiently resolve disputes and revisions.

Service is Our Trademark

For years, we have made the mortgage process look easy to those who have entrusted us with their home loans.

…efficiency and customer service is second to none.

Tom and his team make you feel like family and not just a number. He walks you thru all of your options and helps guide you thru the whole process. The attention he gives to his clients is untouchable. You will not get service like you get from him anywhere. 5 star all the way

…the Benchmark Mortgage Team are outstanding! From start to finish they kept us informed of the process, progress, and approvals. By far the most professional and expedient loan process I have ever been through.

We take service seriously. These are just a taste from a small collection of genuine testimonials giving by our Benchmark clients/fans. I encourage you to view more testimonials my testimonials. If you love being taken care of and like what you see, call mefind your branch or apply now

We Are A Top Mortgage Company In America!

by I Am Benchmark

Mortgage Executive Magazine named Benchmark Mortgage among the Top 100 Mortgage Companies in America in their Spring 2016 issue. We are honored and proud to be recognized!

Home Prices and Mortgage Interest Rates to Rise in 2016

by I Am Benchmark

Your home’s mortgage payment is based on the price of the home (minus the down payment), and the interest rate for the loan.

Both prices and interest rates will likely rise in 2016.

Home Prices

CoreLogic anticipates a national 5.2% home value increase for the next year. The percentage varies by state, with WA, CA, NV, UT, AZ, NM, FL, and VT seeing the greatest increase at an average of 7.6% (the highest being CA at 10.8%, the lowest of this group being NM at 6.0%). The lowest forecasted home price increase is WV at 1.3%. Clearly, the majority of the country is projected to see a real home value appreciation that outpaces currency inflation (0.5% from 2014-2015).

Which reminds one of this post: click here

Mortgage Interest Rates

All four establishments who provide future projections on mortgage interest rates agree that rates will rise in 2016. The following table shows the change for each quarter of the next year.

Quarter	Fannie Mae	Freddie Mac	MBA	NAR	Average of all four
2016 1Q	3.9	4.0	4.2	4.1	4.05
2016 2Q	4.0	4.2	4.4	4.3	4.23
2016 3Q	4.0	4.4	4.6	4.6	4.4
2016 4Q	4.1	4.6	4.8	4.9	4.6

So, What’s the Bottom Line?

Since home prices and interest rates expected to increase over the next year, it makes sense to buy sooner rather than later, if you are buying a new home.