It is important to note that high balance loans are now easier to get than before. If you are looking at buying a property in Philadelphia, PA, then the following information will be helpful in deciding how to find the best mortgage for you as you embark on the house-buying journey.
How the Mortgage Industry works
The mortgage industry in the United States is one of the most efficient and reliable in the world. Backed by the government, home loans are low-risk loans that are financially sound investments. Government programs, such as the Federal Housing Administration (FHA) and the Veterans Association (VA), can provide benefits such as mortgage default insurance that can be paid for by the buyer or the agency itself.
For none government entities, Fannie Mae and Freddie Mac are the two largest mortgage companies. They do not offer mortgage default insurance, but their policies cover everything, including the FICO score of the buyer, as well as enforcing a maximum mortgage size limit to minimize the risk of defaulting on payments.
How high balance loans work
In the last few decades, the housing market has been one where getting a mortgage was very difficult as the rate of foreclosures was extremely high. In an environment where banking was faltering, and mortgage lenders were failing, Fannie Mae and Freddie Mac both set a strict national maximum loan limit.
For people buying outside the national average that had been set, getting a mortgage was very difficult, until Fannie Mae and Freddie Mac introduced high balance loans for certain areas of the country that exceeded the national loan standard. In areas that were particularly expensive to buy in, such as Orange County and New York’s five boroughs, limits for loans were increased significantly to help buyers into homes.
There are currently 234 areas within the United States that are designated as high-cost areas. And this is good news for people who are looking to purchase a home inside those areas. These loans have now meant that buyers do not have to meet a $300,000 deposit to buy a $700,000 home, which would have been the case on the original maximum mortgage loan limit.
How to get a high balance loan
If you are looking at purchasing a home in Philadelphia, PA, then high balance loans may very well be an option for you. With more accessibility to loans, it is now easier to get funding to buy a house. Fannie Mae and Freddie Mac have backed lenders who need higher limit loans and have made it easier to access the funding needed for those homes.
This project has been running for six years, and more people than ever are taking advantage of this new ability to get a high balance loan. Mortgage standards are relaxing even more, and this means better deals that ever for home buyers. No longer do buyers have to present a 5% of their funds when applying for a loan, but can use gifts and grants to help access the money that they need.
Buying a condominium home has also become easier, with it no longer being required for two comparable sales from outside the building or project needed to approve a loan. For buyers, in general, the increase in loan-to-value limit means that their buying dream home is closer to being within their reach. Second home buyers and buyers of investment properties also now have access to high balance loans for their purchases.
For the last few years, the American dream of owning a home seemed to fade. Foreclosures on houses rose quickly, and many people could not afford the terms of mortgages to purchase a home. That has now passed, and homes are becoming easier to purchase, and loans are becoming even easier to manage and pay off. No longer does owning a home need to be a crippling responsibility, but once again American families can dream, and buy, their own piece of the American Dream. Talk to your Everest Home Mortgage today about high balance loans in your area.