FHA is About to ChangeTheir Mortgage Loan Amount Caps

As of October 1st, 2011, the maximum loan amount for an FHA mortgage will decrease from $387,500 to $305,900! That is a HUGE reduction.  Mortgage advisors don't know how long these reduced amounts will be in place or if they are a temporary reduction.  It's sort of scary because if you have a contract to buy or sell a home with FHA financing and it is scheduled to close after October 1st, 2011, you are advised to get on the phone with your mortgage provider to fully understand the implications.  Most likely what it means is that you will have to bring more money to the closing table than you had originally planned.

In the past, when FHA loan caps were adjusted, transactions that were in the pipeline and had been either pre-approved or given a conditional commitment (they were at some point in the mortgage approval process) were exempt from the new standard.  Unfortunately, with the October loan cap reset, this is not the case.  Your transaction has to CLOSE by 10/1/2011 or your mortgage falls prey to this new, significantly reduced loan cap. 

Be an informed consumer of real estate and mortgage services, contact your mortgage provider right now to find out how this soon to be implemented FHA change might affect your purchase or sale!