|Do You Need a Jumbo Loan?|
For 2021, the Federal Housing Finance Agency (FHFA) which oversees Fannie Mae and Freddie Mac raised the maximum conforming loan limit for a single-family property from $510,400 in 2020 to $548,250. In high-cost areas, including parts of California, New York, Washington D.C. and others, the limit for conforming mortgage loan limits is 150% of that limit, or $822,375.
You can also get a jumbo FHA loan, which follows the same limits as for conforming loans, with the exception that some counties in Hawaii, Alaska and Guam have limits as high as $1,233,550.What if you need to borrow more? You’ll need a jumbo mortgage loan, defined as a loan that’s any amount over conforming limits.
If you’re wondering whether you will need a jumbo loan to buy your next home, check conforming loan limits for your area here and FHA loan ceilings here. What does it take to qualify? Ally.com suggests that non-conforming loans pose a higher risk to lenders. Qualification requirements can vary among lenders, but you will likely need higher credit scores, down payment and cash reserves, and you’ll pay higher interest rates and experience greater scrutiny of your financial sources. Not all lenders provide jumbo loans, so it’s wise to shop around to get the best terms. You can also ask your Berkshire Hathaway HomeServices network professional for referrals to lenders who are experienced and willing to make jumbo loans or that offer other loan products that allow you to meet the FHFA limits for high-cost areas.
In April 2021, Bitcoin hit an all-time high in the price of its coins, virtual trader Coinbase went public with a valuation of $86 billion, and Venmo, owned by PayPal, announced it’s adding support for cryptocurrencies.
All of these give access to customers who can now easily buy, sell and pay for items with cryptocurrencies for lower fees, more privacy and more security than they currently get through traditional banking.Coinbase.com explains that cryptocurrencies are simply decentralized monies to be used over the Internet. No governments, banks, companies or other entities are in charge of it, allowing anyone who wants to participate to be able to. Transactions are safer as they don’t include personal information to merchants, lenders, payment processors, advertisers, or credit reporting agencies. While the coins are volatile, you can even turn your virtual coins into dollars, as one homebuyer did in Texas in 2017 using Bitpay at the seller’s request.
According to CNBC.com, all you need is for the buyer and seller “to agree on exchanging bitcoin for the property.” Or another cryptocurrency if you prefer. All transactions are public and transparent through an open book technology called the blockchain. If you don’t have enough bitcoin cash to buy a home, no worries. You can start saving for your down payment by using USD Coin, which is tracks 1:1 with the U.S. dollar. Customers who hold USDS coins can earn rewards, an alternative to a traditional savings account, says Coinbase, so start saving for your down payment now.
Home prices are going up, but in some areas of the country, it may be cheaper for you to save money for your own home by renting another year. According to Move.com, renters can save thousands on a lease in the nation’s largest tech hubs, compared to pre-pandemic prices.
In February 2021, the U.S. median rent, which is calculated by averaging the median rent of the 50 largest metros, was up 0.6% to $1,452, well below its pre-COVID growth rate of 3.2%. Meanwhile, the median mortgage payment, reports TheBalance.com, was $1,100 in 2020.
Monthly mortgage payments are based on the loan amount, interest rate, and the term, typically 30 years. Renters are required to pay hefty security deposits that are often not refundable. Landlords can raise rents when your lease expires. Homeowners make down payments which reduce the amount of money they need to borrow to purchase a home; they pay ongoing expenses such as property taxes, homeowner’s insurance, and private mortgage insurance in many cases. However, mortgage interest and property taxes are tax-deductible, if you file long form. TheMortgageReports.com suggests that buying is a long-term investment, with prices going up over time. The amortization of your monthly mortgage means that at first little money goes to reduce the principal and the majority goes to pay interest to the lender. The longer you own, that slowly reverses until you’re paying mostly principal and little interest. Over time, you’ll own something, whereas with renting, you get no ownership stake.