Tags: Conforming | mortgage limit | Housing | Wall Street Journal

WSJ: Conforming Mortgage Limit May Be Raised

By    |   Monday, 20 July 2015 09:02 AM

Those of you looking to buy an expensive home without paying all cash may be in luck.

The Federal Housing Finance Agency (FHFA) is considering an increase in the maximum size for a conforming mortgage for the first time in 10 years, The Wall Street Journal reports.

A conforming loan is one financed by mortgage agencies Fannie Mae or Freddie Mac and usually has lower interest rates than a non-conforming one.

The current limit for conforming mortgages is $417,000 in most U.S. cities and $625,000 in the most expensive ones. Mortgages larger than this are called jumbo mortgages. It's usually easier to qualify for a conforming loan than a jumbo loan.

In May, the FHFA, which oversees Fannie and Freddie, asked for public opinion on its house price index, and it will decide during the fall whether to increase the conforming maximum effective Jan. 1, writes The Journal's Anya Martin.

She offers several tips to qualify for a conforming loan, including a larger down payment on your mortgage.

Meanwhile, with both existing and new home sales booming and the S&P/Case-Shiller index showing that home prices climbed 4.9 percent in the 12 months through April, the housing market is sitting pretty, right?

Not if you're poor, says David Dayen of the New Republic. "The housing recovery has skipped low-income neighborhoods: 15 percent of homes worth less than $200,000 are still underwater," he writes. The figure is just 6 percent for homes over $200,000. Underwater means a homeowner owes more for his/her mortgage than the value of the home.

African-Americans suffer the worst, Dayen says. "Middle-class black households are more likely to live in neighborhoods with lower incomes than the average low-income white household."

Blacks are hit with heavy foreclosures, because "predatory lending was directed at minority homeowners," Dayen states. Minority borrowers account for a disproportionate amount of subprime mortgage loans.

"Until we figure out another way for the middle class to build wealth other than purchasing a mortgage, the discriminatory effects of our housing system will further a permanent underclass among people of color," Dayen says.

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Those of you looking to buy an expensive home without paying all cash may be in luck.
Conforming, mortgage limit, Housing, Wall Street Journal
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2015-02-20
Monday, 20 July 2015 09:02 AM
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