Yesterday, FHA announced the increase of their loan limits beginning on January 1, 2016 to $437,000 for single family residences in the following Tennessee counties: Cannon, Cheatham, Davidson, Dickson, Hickman, Macon, Maury, Robertson, Rutherford, Smith, Sumner, Trousdale, Williamson, and Wilson. The increase of the FHA loan limits will likely enable increased home-ownership opportunities in these 14 Tennessee counties for many reasons – some of which might be overlooked by the casual observer.
The obvious additional opportunities for those desiring to buy or refinance houses is possibly obvious. Now home buyers wanting to buy a house up to $452,000 can do so with only a 3.5% down payment! Buying a $452,000 anywhere in these counties with only a $15,800 down payment is an amazing option for many to consider. This down payment can come as a gift from a family member and all of the closing costs for this purchase can be paid by the seller or the lender. This arrangement can be a life-changing opportunity for many who have desire to live in an area where the safety, convenience or educational benefits could reap returns for many generations to come.
Others many need to refinance their homes or consolidate 1st and 2nd mortgages or other overwhelming debts and need the benefit of refinancing their home with an FHA loan up to 85% of the appraised value. A borrower using an FHA loan to refinance their home is allowed to draw out this cash with no questions asked for paying off these high payment debt accounts or for making home improvements to their existing house. The $11,500 increase in the FHA loan limit on January 1 might give those in need the extra breathing room to cause this new refinance loan to make sense for them to accomplish these financial goals to set them up for success for decades to come.
And finally, what many may not be aware of, the uniqueness of FHA underwriting guidelines may allow many who desire to buy or refinance to move forward with their new loan for any of these reasons:
- FHA allows for a “non-occupying, co-borrower” to be added to the loan where those who are planning to live in the house might not qualify on their own merits. Lenders can add a parent, sibling, child, grandparent, aunt, uncle or cousin to the loan application and include their income, assets and credit profile to strengthen the quality of the loan to increase the possibility of loan approval.
- FHA allows for financing of mixed-use properties with residential interest rates and guidelines. This would give a buyer the opportunity to purchase a property designed for use as a business AND a residence to purchase the entire property using FHA qualifying guidelines and still use part of the house for business use.
- FHA allows for property owners and home buyers to buy or refinance their homes setting aside additional money for repairs, upgrades, remodeling and rebuilding of the house – all in one loan. This renovation loan called the FHA 203K is an amazing loan which enables home buyers to buy a distressed house and make it a dream house with all of the features that the new home buyer needs to make this home an investment they will enjoy for decades to come and to improve the entire neighborhood.
FHA loan increases on January 1, 2016 may seem like something that only mortgage geeks like this author might get excited about when really other industry partners and home owners and future home buyers should also welcome as we ring in the New Year!
(Please contact this author for additional details about any of the uses of the FHA Mortgage and how it might be of help to you or those you know.)