Quick Market Update: Student Loan Barriers Lifted: VA Loan Limits
It has been a while!! This market has been crazy and I have been at the forefront! I know you have read the articles and have seen headlines regarding how buyers are paying over the asking price, no contingencies, and either waiving appraisals or providing funds to cover the gap between the appraisal amount and asking price. Buyers today are paying $10,000-$40,000 over the list price in certain states. Yes!! In some states $40,000 plus over asking!
New Construction costs have skyrocketed due to the cost of lumber and other construction materials. Communities are on waitlists months ahead of the first house being built. Because of the increase in the cost to build, builders have had to reassess how they do business. Some builders build into their contracts construction contingencies for price increases. This means that if the cost of construction rises before or while the home is being built, the buyer will have to pay additional costs other than the agreed-upon deposit when the contract was signed.
Some builders are building "spec" homes with no room for buyers to convey how they want their homes to be built. This means you do not get to choose cabinet colors, floor plans, or any of the fun items that come along with new construction. The builder will then list the house at market value upon completion to get the best return for profit.
Interest rates are at an all-time low but the housing inventory is also low. This is creating stress for buyers but for sellers, this is an awesome time. If you are still interested in purchasing, there are few things to remember.
Listen to your Agent!!! They are licensed and trained. All transactions are different. Your situation may be different from someone else. Do not compare real estate transactions.
Talk and communicate truthfully with your lenders and realtors about your financial situations. Don't let your dream home fall through because of inaccurate reporting of finances.
Be prepared to ask over the list price and also have the funds to pay the amount you are asking.
If you do not have extra money to ask above list price, look for homes that have been on the market for a while and pursue those properties.
Be prepared to do any repairs needed on the home. 95% of offers are asking for information only inspections, which means, the buyer will do repairs if needed.
You will most likely need to pay your closing cost. Because it is a Sellers Marker, sellers are not agreeing to pay portions of buyers closing costs to help the buyer purchase the home.
Be Patient!!! Be prepared to go through several offers on homes before you secure a home. This market is tough.
Student Loan Barriers Lifted
If you have been turned down from receiving a Pre-Approval under FHA due to student loan debt, HUD has changed its guidelines! The updated policy closely aligns FHA student loan debt calculation policies with other housing agencies, helping to streamline and simplify originations for borrowers with student loan debt obligations. The previous guidelines required lenders to calculate a borrower’s student loan monthly payment of one percent of the outstanding student loan balance for student loans that are not fully amortizing or are not in repayment. The new policy bases the monthly payment on the actual student loan payment, which is often lower, and helps homebuyers who, with student debt, still meet minimum eligibility requirements for an FHA-insured mortgage.
Call your lender if you were previously denied a pre-approval due to the old rule to see if you now qualify. If you do not have a lender. Contact me and I will put you in contact with a lender.
VA Loan Limits
As you know, I am a Veteran. I served from 2007 to 2019 in the United States Air Force. Most Veterans utilize a VA direct or VA-backed home loan that offers no downpayment (Conventional and FHA mortgages require you to pay 3%-10% down on the loan), no private mortgage insurance (PMI), or mortgage insurance premiums (MIP) and other benefits.
Before 2020, Veteran Backed loans could borrow up to the Fannie Mae/Freddie Mac conforming loan limit on a no-down-payment loan in most areas. Currently, eligible Veterans, service members, and survivors with full entitlement no longer have limits on loans over $144,000. This means you won’t have to pay a down payment, and the U.S. Department of Veterans Affairs guarantees to your lender that if you default on a loan that’s over $144,000, they will pay the lender up to 25% of the loan amount. You have full entitlement if you meet either of the requirements listed below.
At least one of these must be true. You’ve:
1. Never used your home loan benefit, or
2. Paid a previous VA loan in full and sold the property (in this case, you’d have your full entitlement restored), or
3. Used your home loan benefit, but had a foreclosure or compromise claim (also called a short sale) and repaid us in full
Note: If you have remaining entitlement, you do have a home loan limit.
If you have any questions regarding the new VA Loan Limits contact your lender or call the Department of Veterans Affairs at 877-827-3702 to find the nearest VA Regional Loan Center.
If you are looking to purchase or sell a property and need a consultation, please request an appointment. I have provided my information below.
Source: U.S. Department of Housing and Urban Development
Source: U.S. Department of Veterans Affairs
Source: Forbes Advisor