Home loans that conform to the Fannie Mae and Freddie Mac guidelines tend to have better terms than non-conforming loans. That’s why it’s good news that the Federal Housing Finance Agency (FHFA) recently announced that the conforming loan limits have increased to $647,200 for 2022. This is a $98,950 increase from the $548,250 loan limits of 2021. In some higher-cost areas, the loan limits could be as high as $970,800, which is a whopping $148,425 increase from the $822,375 high-cost loan limits of 2021. Click here to view a map of all the loan limits across the US.
As for loans insured by the Federal Housing Administration (FHA), the loan limit for low-cost areas went up to $420,680, and the loan limit for high-cost areas went up to $970,800. There are also some special exception areas such as Alaska and Hawaii with higher loan limits. Here are two ways to benefit from this increase:
BUY A HOME
It may make sense for you to consider a new home purchase using the higher loan amounts. This may be the perfect time for you to lock in a long-term interest rate because many economists believe that interest rates could go up over the coming year.
It may be worth it to consider a home loan refinance if:
- You currently have a home loan that is near the loan limit
- You’d like to make some home improvements
- You’d like to consolidate other debts into your home loan (such as home equity loans or credit cards)
- You’re paying mortgage insurance and your home has increased in value from the time when you purchased the home
- You anticipate a change in your cash flow situation in the coming months (college funding, retirement, elder-care, etc.)