Those looking to buy homes in the new year will want to know that the maximum on conforming loan limits for mortgages to be acquired by Fannie Mae and Freddie Mac will increase in 2019.
What exactly are Fannie Mae and Freddie Mac? Originally, Fannie Mae was chartered by the U.S. Government in 1938, and while Freddie Mac was chartered by Congress in 1970 as a private company, both were meant to help ensure a reliable and affordable supply of mortgage funds throughout the country. Today, both are shareholder-owned companies that operate under congressional charters.
According to the Federal Housing Finance Agency’s website, Fannie Mae and Freddie Mac are meant to “to provide liquidity, stability, and affordability to the mortgage market,” and they provide this liquidity “to the thousands of banks, savings and loans, and mortgage companies that make loans to finance housing.” Both these companies now buy mortgages from lenders. Once the mortgages are acquired, they can do one of two things: hold them in their portfolios or package the loans into mortgage-backed securities than may be sold. Lenders can then “use the cash raised by selling mortgages to the Enterprises to engage in further lending.” These purchases provide a sable supply of mortgage money to individuals and families that buy homes as well as investors that purchase apartment buildings and other multifamily dwellings.
As you can read in this article, the baseline loan limit for these companies was established at $417,000 by the Housing and Economic Recovery Act of 2008. This Act also mandated that, “after a period of price declines, the baseline loan limit cannot rise again until home prices return to pre-decline levels.” Home prices, though, are on the rise. So, for the third year in a row, the conforming loan limit has been increased. The increase in 2019 is bringing the loan limit from $453,100 to $484,350, which is a 6.9% increase.
So although home prices are up, now is an excellent time to get in on buying a home because agencies made to help with your mortgages now have an increased ability to aid you.
If you have more questions about the particulars of home buying, you can rely on Stonebridge Mortgage Group to help guide you through the home buying process. We help get you pre-approved for a mortgage and help with your real estate loans and other mortgage solutions, both residential and commercial. We serve the greater Portland area and are in Gresham, Oregon.