Mortgage News You Can Use!
Good news - the House and the Senate voted on Friday to a one-year extension of higher loan limits for mortgages backed by the Federal Housing Administration, Fannie Mae or Freddie Mac. FHA, Fannie and Freddie will continue to be authorized to guarantee loans of up to 125% of local median home sales prices, up to a maximum of $729,750 in high-cost areas. The floor for FHA in normal markets will remain $271,050, and $417,000 for Fannie Mae and Freddie Mac. We expect a final vote on the $8,000 Tax Credit this week - so this extension coupled with the $8000 tax credit and low rates should help strengthen the housing market during the first quarter of 2010. The Institute of Supply Manager's Manufacturing Index rose to 55.7, higher than expectations of 53.0. Within the report was an improved reading on employment, which suggests some hiring in the manufacturing sector. This is an encouraging reading heading into Friday's official Jobs Report.
Pending Home Sales were reported up 6.1%, mostly attributable to first time home buyers rushing to get into contract before the expirations of of the $8,000 tax credit - remember, we are forecasting an extension of the tax credit program. It's the 8th straight monthly rise and the best overall level since December of 2006. We think that the housing sector is on the mend, but we could see a soft patch hit after the eventual expiration of buyer tax credits and MBS (mortgage backed securities) purchasing. That said, this looks like a very good time to be a buyer of a home if your intend to keep it for the long haul. One other point - if the tax credit extension is approved, there is a provision to extend the benefits to move up buyers. Beside the expanded income limits of $125k for singles and $250k for married couples, owners of a home for 5 of the past 8 years could qualify for a $6500 tax credit.
Although the new loan limits passed, the bill hasn’t been signed and the guidelines released. We will keep you posted once the legislature is signed and we know the requirements on the loan limits and the new tax credits..
Stay tuned.