Engel & Voelkers

FHA Loan Limits drop in January, anxiety and activity now in the $275-$400k range

The expected drop in FHA loan limits has been announced. Properties must be under contract by the end of the year, with the rate registered and locked in, to use the old FHA loan limits, when the house closes in 2014.

Anyone searching or selling in the $275k-$400k range will be in the most affected section of the market, as today’s FHA loan with 3.5 % down would allow the purchase of a home up to $356,959 with only the minimum $10,709 down. Many people will not qualify to take advantage of a 5% down conforming loan. The drop in loan limits will tighten everything up after January 1, and make sellers anxious, so expect a flurry of sales as this takes FHA loans out of the financing for that sector and leaves the Conforming loan limit of $417k as the next limiter/qualifier.

I would expect fewer decent houses to choose from through the first quarter, with old inventory, rejected by others, and fewer properties going to market until the end of the school year.

“FHA has announced that beginning January 1, 2014, the FHA loan limit in Maricopa County single family residence will decrease to a maximum of $271,050 from the current maximum loan limit of $346,250 (the decrease is in effect for all other AZ counties except Coconino). But, what does this mean to you?

With 3.5% down, a buyer will be able to purchase a home for $280,850 or less, with a maximum loan amount of $271,050.00.

This will have a huge impact on buyers and sellers of homes priced between $280k and $400k.  If you can get under contract before the end of December 31, 2013, you can still use the current maximum limit of $346,250. The scrambling starts now for both buyers, and those hoping to sell.”

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About the Author
John Selman is an Associate Broker, with previous experience as a certified Luxury Agent at Coldwell Banker Global Luxury, and The Agency. John consults with clients, handling the purchase and sales of their homes, dives into the hunt for a great property with the goal of achieving positive equity at close whenever possible, enthusiastically showcases a home for sale to bring out its best features, and truly loves what he gets to do every day. John moved to Engel & Voelkers to take advantage of their global reach in home and select lifestyle offerings, the experience and professionalism of their management and advisors, and E&V’s superlative marketing and support tools. Having grown up around the world, he arrived in the Valley from Canada, 35 years ago, renovated central Phoenix properties during college, and is intimate with the best neighborhoods historically, and those now on the rise. John earned his MBA in marketing from Arizona State University, with an undergraduate focus on biology, finance and computer science, and continued to pursue advanced coursework as an executive. As an e-marketing and sales executive, with stints with IBM and start-ups in San Francisco, Dallas, New Orleans, Las Vegas, Atlanta, New York, La Jolla and LA, his regular relocation home searches provided valuable experiences, both good and bad, and led to his real estate career. John has practiced and taught the Consulting Sales process to the best sales people in business. A former #1 sales executive at IBM, and an instructor of executive education for IBM, he teaches, practices, and practically breathes the Consulting Sales Process. John honed his luxury-specific marketing skills, re-positioning and invigorating his gourmet food and wine shop in downtown Malibu, initially as a side business. As a pioneer in email marketing and blogs, he delivered wine advice and sold rare wine across the country to America’s wealthiest collector's and some of the biggest names in entertainment and business. Running his fine wine boutique, Malibu Village Wines, he consulted with auction houses, and worked with architects, cabinetmakers, contractors, and some of America’s best Realtors designing wine cellars for luxurious estates, and realized that Real Estate was what he wanted to concentrate on in his future. Expanding with a bar and restaurant, he catered to the needs of some of the world's wealthiest business people and celebrities. Having created a shop that was a social hub for the wine community, built a wine clientele around the world, and co-founded the Wine Classic for ChildHelp charity, John decided it was time to move on from technology, food and wine, and focus on real estate- his other lifestyle passion. He enthusiastically enjoys, and irreverently writes about homes, food and wine. He is passionate about all three, loves architecture, grapes, cooking, good renovation, old cars and motorcycles, his family, his Bulldog “Rugby”, and most (but not always all) of his friends. In his rare free time, he coaches paddling sports on Tempe Town Lake, strums a guitar while singing offkey, visits his favorite old ski haunts and complains of aches and pains, avoids anyone carrying a rugby ball or organizing a "tour", travels up and down the coast seeking out great food & wine, looks for water to paddle SUPs or outriggers, and laughs at his dog.

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