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FHA Lowers Limits for Consumer Mortgage Loans

As FHA lowers limits on home mortgage loans, consumers move toward to the private sector. Government relinquishes control.

JACKSONVILLE, Fla., Jan. 28, 2014 /PRNewswire-iReach/ -- In January 2014, FHA (Federal Housing Administration) announced its landmark decision to lower home mortgage loan lending limits for single family homes. The release shook the entire market from its very foundation and caused much confusion among borrowers.

Contrary to common perception FHA does not directly offer home loans, but instead, provides government-backed insurance to banks and lending institutions that provide mortgage loans to borrowers. Loans that fall under the umbrella of FHA would require a minimum down payment of 3.5 percent.

In its official press release, FHA announced new limits. According to the announcement, the current standard loan limit for low-cost housing areas will stay at its current level of $271,050 but the new national-ceiling loan limit for highest cost areas will be lowered from $729,750 to $625,500.

Proponents of the lowered limits cite several reasons, such as a potential reduction in government dominance and an opportunity for the private sector to regain its original control in a market that was largely free from government influence, barring the exception of regulatory mandates and policies.

Critics, on the other hand, are concerned about the potential impact of the new limits on down payments, which in some instances could increase to twenty percent.

Borrowers will not be impacted to a great extent

Despite the concerns, however, the new limits are less likely to impact the average borrower. Considering the fact that the average price of homes in US range from $200,000 to $250,000, most of these purchases would be well accommodated by the $271,050 limit which, incidentally, has not changed.

Private sector has bolstered its efforts to bridge the gap

From low interest jumbo loans to a wide range of privately-funded mortgage programs, there are a plethora of options a borrower can avail of. Furthermore, many private banks and lenders are aggregating at loan marketplaces, such as BadCreditPersonalLoans.net to offer low interest, low down payment loans even at the higher end of the spectrum.

"Although there is much concern about the new FHA limits, our analysts estimate the impact on the average consumer to be minimal. This is certainly the case for borrowers who are not targeting ultra-luxury homes. At Loans.net, we have assembled a network of hundreds of home mortgage loan providers that offer programs at or near FHA limits," says  Peter  Myers, founder of Loans.net, a free online marketplace that allows consumers to compare and apply for a wide range of loans, including short term personal loans.

 

http://www.badcreditpersonalloans.net/ helps consumers compare and shop for loans online. The site boasts a network of hundreds of lenders and banks that aggregate to offer low cost, low interest loans to a wide range of applicants, from the higher bracket of credit scorers to those at the lower end of the spectrum. The site allows decisions to be made online -- instantly -- and prides in transferring funds within twenty four hours.

Media Contact: Peter Myers, BadCreditPersonalLoans.net Ltd, (872) 222-9076, [email protected]

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SOURCE BadCreditPersonalLoans.net Ltd

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