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December 27, 2019 55 min

Today we are going to talk about the new loan limits that go into effect January 2020. What that means for buyers. Also we'll talk about what happens when an appraisal on a property comes in below purchase price. What options does a buyer have?

Jon Lafferty:
Let's talk about the new loan limits and how it might create some turbulence for buyers who are unaware of where those loan limits end and what that means, the difference between standard and jumbo. 

Tony Abate:
Sure, yes. It's an important topic. It doesn't come up a lot. But your loan limits for the majority of mortgages do get changed on annual basis. You have your three typical buckets, conventional or conforming loans, FHA loans, and then VA loans. What happens is the government entity that has control over these, for instance, on conventional loans it's FHFA, which is the Federal Housing Finance Agency. 

Tony Abate:
Basically what they do is they do an analysis and they evaluate the increase or decrease in home values nationwide. When there is an increase, then the logic is well then the conforming loan limit really should change with that. They compare third quarter to third quarter so that they can start a new year with an adjustment and give everybody some ramp up time. 

Tony Abate:
For 2020, for instance, the new conventional loan limit is 510,400. Over half a million.

Jon Lafferty:
For Metro Detroit?

Tony Abate:
That's nationwide. Conventional is not local specific, if you will. Yes, in certain high cost areas like Hawaii where they get a bump. 

Jon Lafferty:
Or Los Angeles or San Francisco. 

Tony Abate:
Exactly. Yes, but for those of us in this area, 510,400. That's an increase over last year's number 484,000 and some change. That's as a result of a national price increase of single family homes for 4.9%. We can take that as good news, I would say because it does show health in the market. 4.9% is a nice increase, but it's not an unreasonable increase. It's not like the market has gotten away from itself. Just some historic analysis. When I got in the business, it was, let's see, 202,300 was the conforming loan limit. 

Have a Happy New Year and we'll see you guys next year in 2020. We'll start season two and looking forward to a lot more fun discussions, some great guests and looking forward to answering user... questions from you guys out there.

Thank you for listening to Avoiding Real Estate Turbulence. If you'd be so kind to subscribe and review and rate we would appreciate it. Please share with your friends, family and co workers that they too can find us on Facebook, YouTube and, where you'll find our contact information and every episode. You can also find us on Apple podcast, Google podcast and Spotify. 

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