Throughout the U.S., the average value of a single-family residence has grown by double digits for more than two years. Area homeowners have been rightly pleased to see how rapidly their own home’s market values have continued to appreciate. With increases at those levels, it’s only to be expected that sellers are delighted—but buyers, less so.
One of the inevitable fallouts is that buyers seeking home loans this fall need mortgages that are greater than ‘conforming’ loan limits. Fannie Mae and Freddie Mac guarantee to purchase loans from lenders when they qualify under the conforming loan guidelines. The quasi-federal behemoths enable loan originators to lower interest rates they offer Costa Mesa home buyers when they promise to purchase them, lowering risk. But as home values have risen, home loan amounts exceed those limits. Such loans are then classified as ‘jumbos’—no longer purchasable by Fannie and Freddie. The added risk to the loan originators means higher monthly payment amounts for buyers.
But help is on the way.
Needless to say, both Costa Mesa buyers and the sellers would like to see as many buyers as possible competing for their properties. The help that will arrive on January 1 comes in the form of a major adjustment in the conforming loan limit. Although the amount may fall short of the record increase set in 2006 (it was +15.9%), it will still amount to more than $75,000 in most markets.
For sellers, it’s predicted to make an increase in what buyers can afford to offer. Jumbos aren’t just usually more costly—they also have stricter qualification criteria (such as higher down payment requirements and more stringent debt-to-income ratios). That seems likely. Already in some areas, lenders are confident enough that they will be able to sell larger loans to Fannie and Freddie by jumping the gun. They’re already said to be writing their own higher limit ‘conforming’ loan offers.
As always, our Costa Mesa market conditions are a study in motion. Call us for the latest specifics!
We are built on a philosophy of Heritage & Hustle. The L3 is a full service real estate agency with a regional office located in the heart of #CostaMesa, offering a wide-array of custom services to meet their clients’ needs with roots in the community since 1976. It’s L3 mission is to provide trusted, convenient, responsive service to ensure clients enjoy their real estate experience. The L3 was originally formed to offer personal, concierge-level service as an alternative to the large, nationally based real estate companies. From its small beginnings of only two employees, The L3 has grown to a full staff of 25 serving over 300 clients a year. The L3 is not limited to serving just its clients; it is also committed to serving the community. Not only has The L3 donated hundreds of hours to many area charities, they have also received the prestige of being named one of the #toprealestatecompaniesinCostaMesa If you’re interested in #buyingorsellinginOrangeCounty, turn to the experts. Turn to The L3 and let them help you make your real estate buying or selling dreams come true. For more information or to get started on finding or selling your home contact The L3 today at 714-444-4663 or email us at email@example.com
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