Did you know that the federal government backs nine out of 10 new mortgages? That’s because three years ago Congress raised the amount of the maximum loan guarantee that federal agencies like Fannie Mae, Freddie Mac, and FHA as high as $729,750 in the priciest housing markets. Here in Las Vegas, that guarantee is good for purchases up to $417,000 for Fannie and Freddie loans and $400,000 for FHA loans. This was an emergency measure to try to halt the fall in housing prices. It also made it easier and cheaper for buyers to obtain loans since the government guarantees investors in mortgages will receive payments if the borrowers default. In addition to changing the loan guarantee limits, taxpayers have paid $138 billion to Fannie Mae and Freddie Mac to keep them solvent.
As a result, to reduce the federal government footprint in housing, these limits are set to go down in October, 2011. In the highest markets, the guarantee will drop by over $100.000, to $625,500. In Clark County, the FHA limit will go down $128,950, from $400,000 to $271,050. If you are in contract to purchase a home with an FHA loan for more th an $271,050, you want to be sure you finalize your purchase by October 1. Right now it does not appear that Fannie and Freddie limits will go below the current $417,000, but we’ll let you know if this changes.
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