Hawai`i benefits from increased lending limits.
The Economic Stimulus Act of 2008 is a $168 billion plan intended to jumpstart the sliding U.S. economy. While a lot of media attention has been focused on the $600-$1,200 rebate checks that millions of taxpayers will begin receiving this Spring, the new bill is also designed to help certain "high-cost regions" of the struggling housing market by:
Temporarily increasing the "conforming loan limit" from $417,000 to as high as $729,750 in specified areas; and
Temporarily increasing the size of loans the Federal Housing Administration (FHA) can insure from $362,000 to as high as $729,750 in specified areas.
If you're looking to purchase or refinance a home in a "high-cost region," this is great news. These temporary increases could help you avoid the higher interest rates associated with "non-conforming," or jumbo, loans. Although these new limits only apply until the end of 2008, the legislation does not exclude the refinancing of any past mortgages into these new "conforming loans." That means, if you qualify, you can take advantage of the new limits no matter how many years have passed since you obtained your mortgage.
Given the prices of Kauai real estate, this new act will certainly help out sales in the midrange of our market, say from $750,000 to around $1.2 Million. A high-cost region is typically determined by the median value of its homes. The median value is the specific price that is halfway between the least expensive and most expensive home sold in an area over a given period of time. Do not confuse this with the average home price. The median home price is the price at which half of all buyers bought more expensive homes and half of all buyers bought less expensive homes.
Kauai` homes are currently at a median price in the lower $600,000 range and that will qualify our island for this new program. FHA lending is starting to take up the space in the market previously occupied by the sub-prime loans. So with FHA, you often can put very little down. You CAN use FHA for your 2nd home in Hawaii, however the loan to value ratio will be lowering than on a primary residence where you can purchase with only 3% down. Now, with the increase on FHA amounts, that will assist a lot of folks, including first time home buyers, in getting a new home.
With all the Fed is doing to catalyze more real estate business, this year looks to be a good time for buyer's in our island market. Unfortunately, mortgage rates are creeping up daily.
Ron Margolis, RA, CDPE, ABR Hawaii Life Real Estate Services 808.346.7095 email: firstname.lastname@example.org