Every year the Federal Housing Finance Agency (FHFA) announces their conforming loan limits for the upcoming year immediately following the November release of their House Price Index (HPI). FHFA uses this data on home price appreciation to set the new loan limits for the upcoming year. For areas in the country that are considered high cost, FHFA increases loan limits further and will go up to 150% of the baseline conforming loan limit.
In 2022, the new conforming loan limit for most of the US for one-unit properties will increase to $647,200, an increase of $98,950 from $548,250 in 2021. This means in areas of high-cost or with special statutory provisions, the loan limit can reach as high as $970,800. An example in Washington State would be the counties of King, Snohomish, and Pierce, where the loan limit will increase to $891,250, an increase of $115,000 from $776,250 in 2021.
This significant increase will help home buyers access more credit and remain competitive in the current market where home prices have quickly risen. In fact, this year-over-year increase of 18% in the conforming loan limit is the largest on record dating back to 1970.
If you have any questions or want to find out if you qualify for a conforming loan, please reach out today!
In our community outreach effort for Homeseed of Hope, we are featuring Homestead Community Land Trust and the incredible work this non-profit organization is doing to address the housing affordability crisis in the Greater Seattle and King County area. As this region has become a thriving tech sector, it has also become increasingly unaffordable for lower- and middle-income residents. In a city of Seattle housing affordability report published in 2018, data shows that the region has seen a 325% increase in the cost of housing while wages have only increased by 85% since 1997. Homestead Community Land Trust’s mission is to preserve and advance access to permanently affordable homeownership as a means to create thriving, equitable, and inclusive communities.
On October 29th, Homestead Community Land Trust is hosting a Halloween Trivia Night and members of the Homeseed Team will be sponsoring, fundraising, and joining in on the trivia games. We encourage you to learn more about the great work this non-profit is doing to serve marginalized populations across this region and consider donating to the Homeseed Team’s fundraising goal in the links below. Together we can further the impact of Homestead Community Land Trust!
Community reciprocity and reinvestment have long been goals of Homeseed since we first launched in June of 2016. In addition to providing a uniquely empowering mortgage lending experience, Homeseed wanted to use its platform to support the individuals, businesses, and programs in the communities we serve. That desire remains true today and led to us creating Homeseed of Hope – an initiative to guide our community outreach efforts.
The Federal Housing Finance Agency (FHFA) announced today that it will be no longer be collecting a fee on refinance transactions that was known as the “Adverse Market Refinance Fee” effective August 1, 2021 for all qualified mortgages. The lending industry is welcoming the news as this change will help more families take advantage of the low-rate environment and save more money.
If you have considered refinancing this past year but the costs did not justify the savings, now is a perfect time to reconnect to reevaluate your scenario. This is also a great opportunity to leverage your home’s equity to consolidate debt or fund the remodel you have been wanting. It is an extremely inexpensive time in mortgage lending for consumers and you can save even more by acting before rates increase as projected.
Please share this news with your neighbors, families, and friends. I very much appreciate the opportunity to answer any questions and serve your community.
Homeseed’s goal is to reduce the stress of the mortgage process by helping our clients pre-pare early, and make our clients’ offers stand out in a competitive market. To do so, we’ve developed our Cash Committed Closing Program to help achieve this. We’ll provide you with a fully underwritten pre-approval for financing before you find your home so you can shop with confidence. Additionally, sellers will find your offer that much more attractive knowing that you’ll close on time or our Cash Committed ClosingTM program will issue a $2,000 credit to them. Please see rules for eligibility below.
Transaction must be for a home purchase
Borrower(s) must fully complete a loan application before making an offer
Borrower(s) must provide a copy of the purchase contract and the closing date must be scheduled no sooner than 28 calendar days from the date of executed purchase and sales contract
VA loans will require 30 calendar days
Required disclosures must be executed and returned to Homeseed within two business days
Initial loan documentation and information requested by Homeseed must be received within five business days
Any additional documentation and information requests by Homeseed must be received within two business days
Borrower(s) may not request loan term changes within ten business days from the scheduled closing date. Loan changes include, but not limited to, loan program, term of loan, or down payment amount.
Borrower(s) must lock the loan rate and complete all loan requirements and conditions at least seven business days prior to the closing date
The final appraisal, completion certificate, and/or all revisions must be received five business days prior to the closing date
Loans with subordinate financing must have secondary loan approval five business days prior to closing
The loan must close and fund with Homeseed in order for the Cash Committed Closing credit to be paid
Any delays attributable to the borrower(s) outlined in terms, a third party, or the seller that cause the missed closing date
Information provided by the borrower(s) that could not be verified or was inaccurate
The loan amount is $2,000,000 or greater
The loan does not meet federal and state regulatory requirements and/or agency guidelines
The closing date is missed due to acts outside the control of Homeseed. Acts include, but not limited to, inclement weather, natural disasters, catastrophic events, or other public emergencies.
Home appreciation continues to reach historic highs as tight supply and strong demand lead to an extremely competitive housing market. According to the S&P CoreLogic Case-Shiller home price index, prices in February rose 12% year over year across the US. This 12% gain is a 15-year high, and Seattle is one of the top cities with a gain of 15.4% year over year.
Those trying to enter the housing market are feeling the frustrations and disappointments of a competitive low inventory market. In many cases, buyers are having to make over five offers on homes before getting one accepted. However, the risk and rewards can quickly make sense when you consider the yearly equity gains with appreciation being higher than most full-time annual salaries. With a 15.4% gain in home prices year over year in Seattle, a person purchasing a $750,000 home last year would have gained $115,500 in appreciation on average. Historically low interest rates are also helping give a small boost to your purchasing power, so long as they remain low.
In the end, the most important thing prospective homebuyers need to consider is if are you in a position to responsibly take on a mortgage payment. Make sure you are evaluating a range of factors including your finances, personal life, and future. Connect with us today if you have any questions. If you have anyone looking to get pre-approved to purchase a home or refinance, we’d love the opportunity to serve them!
In our competitive housing market, most homes are receiving numerous offers and sell for over the listing price. But what happens when the home appraises for less than its selling price? In a seller’s market, it’s often left to the buyer to cover the difference between the purchase price and the appraisal. And what happens if an appraisal comes in short by $50,000? Or even $100,000? If the borrower does not have extra funds to cover the appraisal gap, Homeseed has a back up plan to help your borrower save the deal.
A scenario we’ll use to go over our appraisal gap strategy is a purchase price of $700,000 with a 20% down payment. If the appraised value comes in $50,000 or $100,000 below the $700,000 purchase price, our loan to value ratio will increase above 80% and the borrower will be required to purchase a mortgage insurance policy. What we can then do is finance a single-premium mortgage insurance policy into the loan amount that helps us cover the appraisal gap. This also allows us to keep the required cash to close similar across all three scenarios. Financing the mortgage insurance premium will increase the loan amount and thus the monthly payment, but not by much. On a $50,000 short appraisal value, monthly payment only increases by about $28. On a $100,000 short appraisal value, monthly payment increases by about $41. This is a relatively inexpensive way to cover up a large appraisal gap in this market.
Please reach out if you’d like to learn more about this financing strategy and other ways to help you clients remain competitive in this market. If you also have anyone looking to get pre-approved to purchase a home or refinance, we’d love the opportunity to serve them!
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